The UK property market is still enjoying a boom, which has persisted for quite a while now. Over the past year, various government restrictions like national lockdowns and sheltering-in-place drastically reshaped how people interacted with their own homes. The necessary transitions into remote working and distance learning set homeowners on the search for more space.
Noticeable mass migration into the suburbs was prompted at the height of the pandemic as people looked to escape from densely populated city centers. After more than a year of coping with the health crisis, this trend is far from showing signs of slowing down. However, the general property market has gone through some changes that everyone from an experienced letting agent to prospective homebuyers should know.
The Current Property Market
There have been three national lockdowns and numerous localized lockdowns since the COVID-19 pandemic began. Amidst all of these, however, the UK property market remained open and extremely active. The first national lockdown was implemented on March 23, 2020, which allowed estate agents to conduct viewings and homeowners to move despite a temporary market shutdown.
A second national lockdown came in November, but only lasted for four weeks, and the most recent lockdown was implemented at the beginning of the year in January. The rise of the property market, which largely began in July of the previous year, can be attributed to various factors. Along with this, it’s also undeniable that the global pandemic has had a major impact on the real estate sector as a whole.
Here are some of the most notable effects that have kept the property market resilient, most of which are also expected to persist well into the year. Both sides of the market, from sellers to buyers, should heavily take these into account to inform their transactions for the coming months.
Rising Prices
Before the start of the year, most housing experts predicted that values would remain relatively flat for 2021. However, house prices have changed drastically over the past few months. In fact, the figures are still continuing to fluctuate.
Data from the Land Registry’s UK House Price Index, which is the most reliable gauge for property prices, showed that the national average prices for homes increased reached £250,341 in February. This accounts for an 8.6% year-on-year increase. House prices are expected to increase by another 4% throughout the rest of the year, according to another estate agency.
Competition Remains
It’s important to note that the current state of the real estate sector indicates a strong seller’s market. Potential buyers, on the other hand, should prepare for more competitive bidding to be able to secure a particular property that they hope to purchase.
The drastic rise in prices can primarily be linked to a growing lack of inventory supply within the property market. Property demand continues to grow, but this isn’t being addressed by a new wave of properties entering the market. At the moment, there are no signs of supply levels increasing further contributing to this imbalance.
Government’s Helping Hand
The Government’s existing financial support schemes like the furlough scheme also play a crucial role in driving the property market forward. Among the most significant schemes that have led to more properties being sold is the stamp duty holiday, which was announced on July 8, 2020. This virtually eliminates the Stamp Duty Land Tax (SDLT) of a property if it reaches a certain threshold.
Originally, the stamp duty holiday was supposed to end on March 31 of this year. The Government has since chosen to extend it in England, Northern Ireland, and Wales, which will eventually lead to more sales.
The tax-free threshold in England and Northern Ireland will remain at the original £500,00 until June 30. It is expected to be reduced later between July 1 and September 30 to £250,000. In Wales, on the other hand, the tax-free threshold has been set at £250,00, which will only last until June 30.
In Full View
The practice of house viewings has also been altered by the global pandemic. In line with government guidelines, estate agents should only consider offering virtual viewings if possible. This trend is expected to continue even in the midst of the ongoing vaccination rollout programs across the country.
Buyers should only reserve in-person house viewings if they are already set on purchasing a particular property. Even then, social distancing measures and other necessary health protocols, especially the wearing of masks, should still be observed.
Looking Ahead
Ultimately, the UK property market remains optimistic even in the wake of the health crisis. House prices have increased at their fastest rate in five years, indicating that consumer demand is at it its strongest right now. Coupled with all the relevant changes in the real estate sector, this should signify a great opportunity for sellers and buyers alike.
