The UK property market has experienced a mini-boom since re-opening after the COVID lockdown. The government’s stamp duty cut could ultimately result in more people moving home over the coming months. In this article, we will explain what is happening to the house prices in the UK, and we’ll provide some advice on making an offer on a property in these unpredictable times.
What’s Happening To The Property Market?
Property markets across the UK have now re-opened, which means that estate agents are now performing in-person house viewings and buyers are able to move home now. The UK government have also cut stamp duty on a temporary basis. This means that buyers could theoretically save up to £ 15,000 in tax if they moved home before April 2021. The cut is intended to reinvigorate the property market in the aftermath of COVID-19, but there are signs that the wheels are already starting to spin.
Provisional data from HM Revenue and Customs ( HMRC) shows that 70,710 properties were sold in July, up 14.5 per cent from June, but down 27 per cent year-on-year. HMRC says that stamp duty holiday is unlikely to have an effect on transaction figures until late August or early September, but the Rightmove property site reports that more transactions have already been negotiated than at any point in the last decade.
How Have House Prices Changed?
It is too early to say how much the coronavirus is having an effect on house prices, and the statistics we see in the coming months are likely to fluctuate significantly. The most accurate house price barometer is the UK House Price Index of Land Registry. The index was frozen during the lockdown, but last week the Land Registry issued delayed figures for April showing a 0.2 per cent month-on-month decline and a 2.6 per cent year-on-year increase in prices.
The Land Registry says that by 21 October, it will be back on course with its planned reports, and by that time, we will have a better idea of what actually happened to the values. Rightmove’sRightmove’s index (based on asking prices rather than selling prices) posted a 0.2 percent month-to-month dip in August. The July National Index (based on mortgage lending) reported a 1.7% month-on-month price rise, while Halifax (also based on lending) reported a 1.6% rise.
House Price Predictions
Despite the optimism, analysts across the board expect the property market to be hit this year, although many believe it will bounce back reasonably quickly. The following forecasts were made before the government declared the reduction of its stamp duty.
Knight Frank expected a 3% decline this year and a 5% increase in 2021.
Savills said that prices could fall by 5-10 per cent this year before increasing by 4-5 per cent next year.
Lloyds Banking Group (including Bank of Scotland and Halifax) said that prices could fall by up to 5% before rising by 2% in 2021.
Zoopla said that the release of pent-up demand could see prices increase by 2-3 per cent in the next quarter, before submerging later in the year.
The Reuters survey of property experts forecasts that prices will fall by 5 per cent this year, before rising by 1.5 per cent in 2021 and 3.5 per cent in 2022.
Will the stamp duty cut affect house prices?
Mid-range buyers in more costly areas of England are expected to be the main recipients of stamp duty cuts, with savings of £ 10,000 on a £400,000 property and £15,000 on a £500,000 property that promotes more moves. In the short term, this could potentially increase house prices, particularly for properties in sought-after areas within the commuting distance of major cities. But buying a home based on a stamp duty cut could be a risky step since you could pay a premium now and then see the value of the property decline over the next 12 months.
When deciding how much to offer, do your homework and note that the estate agent works for the seller, so you’re going to get as large a price as possible. If you are uncertain, consider taking advice from another agency or a professional purchasing agent.
How do house viewings work at the minute?
During the lockdown, estate agents started providing video house viewing, and they will still play a role.
The government’snew guidance notes that buyers can use virtual viewing to browse properties and only view homes in person when they are seriously considering making an offer. In-person access must be subject to social distancing steps. You must wash or sanitize your hands before entering the homes and avoid touching the surfaces. If social distancing is not feasible, both viewers and estate agents should consider wearing a face mask when conducting viewings.
Is It Possible To Still Get A Good Mortgage Deal?
Since the start of the COVID-19 pandemic, the number of mortgage deals available on the market has all but halved. There are still plenty of good offers out there – particularly if you have a larger deposit. Moneyfacts data shows that average rates dropped to record lows in July.
They’re starting to creep back up again now, but they’re still much smaller than they were before the lockdown in March. Deposit buyers of 5 % and 10% were hardest hit by the withdrawal of offers, with nine out of 10 low-deposit mortgages vanishing.
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