Could the UK housing market see strong growth in coming years?
Property prices have continued to climb during the pandemic and many industry experts are wondering if market conditions are sustainable post-Covid. Early signs show that despite a stall in 2021, there are brighter skies ahead.
Thanks to Stamp Duty Land Tax (SDLT) holidays, seeing a generous tax relief on properties up to the first £500,000, together with low mortgage rates, more people than ever are in the market for a new home.
In the week after lockdown 1.0 permitted the property market to begin trading once again, property portal Rightmove reported the busiest day on record, with 5.3 million visits to the site. This was up 120% increase on the week previously and 4% on the same day in 2019.
This market flurry is starting to have an impact on house prices, as according to the ONS, UK average house prices increased by 8.5% over the year to December 2020, to stand at a record high of £252,000 - the highest annual growth rate the UK has seen since October 2014.
However, is this sustainable? With the extended Stamp Duty holiday coming to an end in June, some are saying the housing market could fall flat. This is certainly Halifax's view, with the bank predicting house prices will at best level off in 2021 before a slow economic recovery. Plus, as furlough schemes and other business support measures come to an end, there could be an impact on the unemployment rate - which all could influence the housing market too.
Halifax cites the reason for stalling house prices in the past have been down to a decline in the economy - and we are certainly in that position at the moment. However, financial experts are saying that these are not ordinary times - and the government will be anxious to minimise the economic impacts of the pandemic, as evidenced by the various support schemes to date. Banks too will be keen to capitalise on the government's 95% mortgage programme, after long periods of patience while offering mortgage holidays.
Therefore, it is possible the housing market could see very strong growth. In fact, national estate agency Savill's stated in its annual comprehensive 5 year housing market predictions, that UK house price growth for 2021 will be 4%, with stronger figures coming up in 2022, when Savills' forecasts prices to increase by 5% across the UK and over the five years to 2025, the national estate agency forecasts prices to rise by 21.1%.
Overall, the COVID-19 pandemic has certainly changed the landscape for many sectors. However, at least for the short-term, the UK housing market continues to show resilience.
If you are considering a house move, now could be a good time to buy. Contact the property team at Downs Solicitors to see how we can help.