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Coronavirus And Its Effects on House Prices

Posted by bigroarltd on February 28, 2022

The stamp duty holiday is over, as the housing shortage persists, UK house prices are rising. Buyers compete for properties with prices rising by 10% year-on-year shown in data from the Land Registry. 

How is the UK property market? 

With the end of lockdown and easing of restrictions, the property market has reengaged in the usual activities. In-person house viewings are back, bringing buyer confidence, and people are more able to move houses. In addition, the UK government implemented a temporary stamp duty cut which created some growth in the property market. Some buyers achieved savings up to £15,000 from the tax cut, which ended 30th June. However, till 31st September buyers in England and Northern Ireland were able to save up to £2,500 during the transition period ending the stamp duty holiday. 

Peak transaction numbers near stamp duty deadlines 

165,720 sales completed in September, a rise of 67% compared to August shown by provisional data from HM Revenue and Customs (HMRC), although this was still lower than sales recorded in June. Many property buyers, aiming to close transactions to save on tax before the holiday deadlines, created peaks in June and September. 

What is happening to the housing prices? 

The impact of coronavirus on house prices is getting easier to distinguish as time goes on. Yet uncertainty continues with no clear end to the pandemic, and murmurings of future lockdowns mean prices might continue to fluctuate. 

The Land Registry’s UK House Price Index is based on sold property prices and is a reliable reference for house prices. The latest figures available are for August as it works on a 2-month lag system. 

An October house price index report (based on asking prices) by Rightmove indicated average asking prices rose by 1.8% month-on-month and 6.5% year-on-year. 

An index report by Nationwide found a monthly rise of 0.7% and a yearly price rise of 9.9% in October based on mortgage lending. A similar index report by Halifax reported rises of 0.9% monthly and an 8.1% annual increase. 

What will the rest of 2021 bring? 

37 days was the average time for an agreed sale in September, which was one of the lowest recorded since the beginning of the pandemic from research conducted by Rightmove. 

High demand and high prices 

As mentioned at the beginning of this post, the shortage of housing in the UK is an ongoing problem, creating an imbalance as the supply of new properties is not meeting market demand. Prices will likely remain high for the coming months. 

A statement from Nathan Emerson of Propertymark the estate agency group, says: ‘The market has continued to see an imbalance of supply and demand, with our most recent housing report revealing an average of 19 buyers for every available property on the market. 

‘We remain in a strong seller’s market, which will impact house prices as buyers bid to secure their dream home despite the end of the stamp duty holiday. Interest rates also remain low, which helps with the short-term affordability of higher purchase prices. 

‘Lifestyle changes are still prevalent, and buyers are now looking to a future which is very different from the one they envisioned two years ago. The search for green space, home offices and more flexible living is a trend that is unlikely to diminish before the new year.’ 

Different forms of house viewings 

Adapting in pandemic meant estate agents offered virtual house viewings, with video walkthroughs and 360° image captures. Even with restrictions lifted, the methods are still part of the home buying process in conjunction with traditional house viewings. 

‘Take advantage of any opportunities to view homes remotely before committing to view in person,’ is part of the government’s latest guidance to buyers during the pandemic. If you are going in person to view a house, please consider that you may be asked to wear a mask (unless you are exempt) and sanitise your hands when entering the property. 

Can I get a good mortgage deal? 

The launch of the 95% mortgage guarantee scheme in April has given first-time buyers extra help when purchasing a house with a 5% deposit. Non-first-time buyers offering 5% and 10% have faced the most difficulties with withdrawn deals. The availability of mortgage deals has significantly declined since the pandemic began. 

If you have a bigger deposit, it is possible to secure a mortgage at an affordable rate. Some banks are now offering mortgages with rates below 1%, but with the historic lows last month, deals are becoming more expensive. 

Low mortgage rates 

A statement from David Hollingworth of L&C mortgages says: ‘Fierce competition in the mortgage market has resulted in rates being driven down to new, historic lows. 

‘The supply of property coming on to the market remains low and that combined with ongoing buyer demand will no doubt hold house prices up. 

‘This will be supported by the low mortgage rates, as borrowers will be able to fix their rate in order to protect against any future fluctuation and shore up against the potential of rising costs elsewhere.’ 

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