The Housing Market
The pandemic has had many unexpected economic effects, but some of the most surprising have been on the property market. Some experts predicted house price falls as a result of Brexit and from the economic fallout of lockdown. In fact, the market boomed up and down the country for much of last year. But when according to lender Nationwide the upward trend faltered in March, falling 0.2% month-on-month the doomsayers were back, and keen to point to the end of the upward trend.
Assessing what is really going on in the housing market is actually a challenge. Figures are subject to delay, there are several ways to interpret them, and most of the sources of information do not cover the entire country. Figures from the Nationwide Building Society do cover the entire UK and seem to be one of the more accurate measures. But the 0.2% month-on-month fall they pointed out in March needs to be compared with a much larger 0.7% rise in February. Regardless of this the actual number of homes sold in the UK hit a record in March as buyers and sellers attempted to complete deals before the end of the stamp duty holiday.
In the March budget, the Chancellor extended the Stamp Duty holiday by six months until the end of September. This will see a tapering of support, gradually lowering the nil-rate band from June. The extension applies to all transactions in England and Northern Ireland, meaning buy-to-let investors and homebuyers will continue to benefit from tax savings.
Many experts suggest prices could continue to grow, at least for the next few months. Recent weeks have seen huge demand from buyers and a serious shortage of homes for sale, and it is likely that prices are still heading upwards.
What’s more, record low interest rates mean very low cost mortgages, helping people move up the housing ladder.
There is also a change in peoples focus. Those trapped inside by months of lockdown and looking at a world where working from home is the norm, rather than the exception, may have reassessed their goals. Extra room for a home office, a bigger garden and an attractive environment may be more important than they once were. The entire market may be buoyant, but larger homes outside the big conurbations may enjoy the most dramatic price growth of all.