Huge Increase In Homemovers – Will It Last?
According to a recent report by TwentyCI, there has been a massive increase of 20% in homemovers over the past year . Despite what has been an undeniably difficult year for many sectors, the volume of people moving home has actually risen, possibly due to low interest rates, a Stamp Duty holiday, and for many, a necessary change in location and/or property.
Will House Prices Keep Rising?
Industry Experts predict that sales will grow another 7% and prices will rise another 5.7% on top of 2020’s already high levels. However, are these rates of increase in price and volume sustainable and if not, why?
At present, we have identified several reasons why this upturn in homebuyers might not maintain its momentum:
1.Stamp duty
Chancellor Rishi Sunak has this week extended the stamp duty holiday in the Budget. Anyone buying a home costing up to £500,000 before the end of June will now not pay the tax, and could save up to £15,000, with a reduced discount available until the end of September.
There were previously ongoing fears that many buyers who had begun the purchase process could fail to meet the March 31st deadline to take advantage of the relief which raised the minimum threshold for paying the tax from £125,000 to £500,000.
Use our Stamp Duty Calculator To work out UK rates of Stamp Duty
2. Mortgages
Lenders have struggled to keep up with such high demand for mortgages over the past year and this, along with the Stamp Duty Holiday backlog, means thousands of deals are stuck in a massive queue.
According to Rightmove, it can take more than four months for a sale to go through, although Conveyancing Expert aim to help you move in a more timely manner. Interest rates are remaining low and steady with the average interest on a two-year fixed mortgage at 2.52 per cent.
On the other hand, one possibility is that when the stamp duty holiday ends in September, first-time buyers will regain their advantage because their pre-existing tax breaks will still be in effect. Banks could also launch more First Time Buyer incentives anticipating them to make up a greater proportion of the market come spring.
Ask our Expert Conveyancing team for advice on mortgages and remortgaging.
3. Brexit
Several years of post-referendum uncertainty had a massive impact on the confidence of buyers and sellers alike and the property market has, in part, reflected this. However, now the deal has been done, the negative impact on the property market might see an end. People have been worried that the financial services will suffer, leading to a fallout in the property sector. However, these fears were unfounded.
House prices did stagnate briefly following the referendum in June 2016. However, that was fairly standard for the time of year: In late 2018 and early 2019, prices began to fall fairly quickly as uncertainty around Brexit continued but rose steadily over the months leading up to the general election in December.
The COVID-19 outbreak brought a house prices rise, buoyed by the government’s cut to stamp duty.
4. Furlough
The end of furlough in April 20201 could trigger a short-term increase in property for sale, as some of those out of work will have to sell or rent out their homes, increasing supply and lowering prices. On the other hand, furlough will continue until lockdown restrictions are over allowing businesses to bring their employees back to work with relatively minimal financial upheaval.
However, almost 5 million are self-employed in the UK and are facing bigger challenges when it comes to buying a home: During the past few weeks, several lenders have introduced tougher lending rules for those who run their own business: Santander is limiting its mortgages to 60% LTV for the self-employed. This new restriction took effect on 9 January and was described as temporary, although it is likely to be in place for at least a few more weeks.
5. A third wave?
The evolution of the pandemic and its future course is unknown. However, the Property market has weathered the storm fairly well so far but what would future waves of the virus bring?
Most of us are hoping that the vaccination programme will return the world to a comparatively normal state by the summer. But nobody truly knows how things will pan out and even in the best-case scenarios, the social and economic effects of Covid-19 will be felt for years to come.
Conveyancing Expert are renowned for delivering excellent and efficient legal and conveyancing services. Our goal is to ensure your purchase, sale, re-mortgage or transfer of equity, is completed to the highest standards with the support of our expert conveyancing advice.