Since the Stamp duty holiday was introduced back in early July this year, it has revived the property market considerably and increased interest from overseas buyers too – but there has been some extraordinary statistics, forecasts and findings in areas of the sector.
House prices are on course to increase by 14 per cent between August and November 2020, according to Reallymoving House Price Forecast August 2020.
It has been revealed that annual growth forecast is to hit 11.4% in October and 14% in November on deals already in the pipeline and have been agreed – but the spike is expected to be short-lived, with prices returning to normal levels in Q2 2021.
Significant pent-up demand and an urgency to benefit from the temporary stamp duty holiday is driving activity in the market, with conveyancing quote volumes on reallymoving 55% higher during the three months from June and August than over the same period last year.
Rob Houghton, CEO of reallymoving said:
“Buyers are determined to make their move now, despite the fact that the current spike in prices will in many cases wipe out the stamp duty savings. For those higher up the ladder with secure finances, a healthy level of equity in their property and little other debt, gloomy economic forecasts are only encouraging them to press ahead with the move rather than sit tight and wait out what could be a long and painful recession.
“More than ever people’s homes are their castles and their offices – and with borrowing costs likely to be rock bottom for the foreseeable future, paying over the odds on a purchase isn’t too painful if you’re also getting over the odds on your sale and making a stamp duty saving. It’s a different story for First Time Buyers though, who aren’t benefitting from stamp duty savings in most areas and who have seen low deposit mortgages all but wiped out. This explains why the proportion of First Time Buyers in the market has dropped by 19% since May.
“We anticipate that this boom will be relatively short-lived. With the end of the furlough scheme around the corner and the prospect of further lockdowns on the horizon, not to mention the growing likelihood of a No Deal Brexit, demand is likely to drop off through the late autumn and winter, reversing the current spike in house prices.”
NAEA Propertymark’s August Housing Report also found one in eight (13 per cent) of properties sold for more than the original asking price in August – the highest recorded figure since November 2015.
Mark Hayward, chief executive, NAEA Propertymark, said:
……….”we witnessed a boom in the number of prospective buyers following the government’s announcement of a Stamp Duty holiday, and it seems this is increasing the level of competition in the property market.
“With the increase in the number of prospective buyers since this announcement, many buyers are clearly willing to pay over the asking price in order to secure their dream home.”
However, the Yomdel Property Sentiment Tracker revealed a downward trend for the winter ahead as it showed a slowdown in the volume of new enquiries to estate agents from vendors and buyers accelerated in the past week.
Although enquiry levels from vendors stayed strong at 74 per cent above the same week last year, all vendor and buyer enquiries are steadily dropping now but do remain unseasonably high for this time of year.
Andy Soloman, Yomdel Founder and CEO said:
“Yes, estate agents remain very, very busy but looking at the data it indicates a serious slowdown is rapidly approaching. Add in uncertainty around rising coronavirus cases, the potential for lockdown measures restricting activities, the stamp duty holiday deadline, the normal seasonal downturn and increased anxiety over a no-deal Brexit and you have all the ingredients for another storm.
“Consumers are indicating rising nervousness in live chat, plus remarkably more and more are reporting they have been turned away by estate agents unable to cope with demand. A rejected customer from one agent is a gained opportunity for another”
Meanwhile, the Bank of England confirmed this week that the number of mortgage approvals made to homebuyers jumped to its highest level since August 2007.
Wesley Ranger, Managing Director, Willow Private Finance, said:
“While this is great news, these figures only give a partial picture. Fears from the banks about a recession around the corner, means that huge numbers of people are struggling to get mortgages, including the self employed and those on furlough. Banks are also increasing the cost of borrowing for higher loan to value mortgages, which is discouraging first time buyers and those with smaller deposits from buying properties. For these people, they are often coming up against ‘computer says no’ approach from banks”.
Those taking advantage of the Stamp Duty holiday has meant the cost of moving home in the UK has plummeted by almost 40 per cent. The average cost of buying and selling a home is now just £6,669, whereas before the stamp duty holiday it was £10,911, according to reallymoving’s recent annual Cost of Moving Research.
The property market is certainly going through a lot of change. But, when the stamp duty ends in March 2021, what will happen to the property market?
