As UK house prices reaching another record high in April, buyers, sellers, and property professionals are all quietly pondering the same question: can the numbers keep going up?
The pandemic has created a year of highs and lows for the market, and this month it looks very different compared to May last year, when just a handful of sales went through. Things have changed a lot since then: in-person viewings are possible, small-deposit mortgages are back on the market, and the reopening of shops and services is bringing the economy back to life.
Here are some factors that
Stamp Duty Holiday winding down
The threshold at which Stamp Duty is paid will therefore remain £500,000 until the end of June. It will then taper off, with a £250,000 limit from July to the end of September, and then a return to the normal £125,000 in October.
The suspension of the levy has been identified as the primary reason behind rapid house price growth. Its gradual wind-down is an attempt to avoid any shocks to the market, but there are still fears that its withdrawal will cause a dip.
Mortgage guarantee scheme
Last month saw the reintroduction of mortgages to the market requiring deposits of just 5 per cent. It was the first time many had been available since the coronavirus pandemic struck, and the reason most of them returned to sale was because of a new Government guarantee scheme for the low-deposit mortgages.
Shifting trends in location because of Working From Home
Perhaps one of the most lasting effects of the pandemic will be on the shape of the housing market as a whole. With remote working / working from home (WFH) a more feasible option, buyers feel able to stomach longer commute times than they previously would. Analysis from The Resolution Foundation over the weekend found that this has prompted a ‘race for space’ in some of the UK’s least populated areas. Since February 2020, prices have jumped by more than 10 per cent in the least dense tenth of local authorities in the UK, compared to 6 per cent in populous city areas.
End of coronavirus support
Beyond property-related support, other measures introduced by the Government to help households will come to an end this year. The furlough scheme is currently set to close at the end of September, while payment deferrals on mortgages will end by 31 July.
While this might make some people think twice about buying, Kaan Emin of Apply Mortgages said it could also free up some supply.
“People may well not be able to afford living in their current homes after the support from the government has ended. This will result in a flood of properties on the market and reduce the average house price down because of this influx, whereas at the moment there are not many properties in comparison to the amount of people looking to purchase.”
What will happen to UK house prices? Factors that could affect the market in the next few months
