The extended stamp duty holiday and new government-backed mortgage scheme have given the property market a boost, undeterred by the contracting economy. Blue Rocket’s Mortgage and Protection Adviser Rebecca Burden comments on the current market and how changes over the last year are being felt.
How the Government reinvigorated the market
In the Spring Budget it was announced that the stamp duty holiday the chancellor originally gave in 2020 on the first £500,000 of a property, would be extended until 30th June in England and Northern Ireland, then phased out by reducing the threshold gradually until October.
The Government’s plan to heat up the housing market with stamp duty reductions has worked, and house prices are rising at their fastest annual pace in more than six years, with The Office for National Statistics (ONS) reporting growth of 8.6% for UK average house prices over the 12 months to February 2021.
A market resilient against the odds
The way the property market has rebounded is remarkable, considering that during the initial threat of the pandemic and the first lockdown, understandably nervous lenders withdrew mortgage products and the market seized up.
But the tax holiday, low interest rates, and the introduction of the 95% government-backed mortgage scheme (aimed at enabling more people to buy their own home), combined with pent-up buyer demand, has resulted in a mini property boom that looks set to continue, at least for the short term.
Changes to office-based businesses and more flexible working arrangements caused by the lockdowns have encouraged buyers to look further afield for their next move; in particular, buyers are keen to escape the city, and properties with gardens have been in high demand.
“With no stamp duty payable up to £500,000, some borrowers have benefited more than others,” explains Rebecca Burden, Mortgage and Protection Adviser at Blue Rocket Mortgages Limited, “it has allowed some people, who have been able to work through the pandemic, to move to a new house and to upsize. With a potential saving of £15,000 it has made sense to take advantage of the tax break.”
The frenzied demand for more space and the desire to upsize has seen agreed property sales in the UK reach a 30% increase year on year, whilst at the same time supply has reached an all-time low, causing asking prices to rise.
“The market is really positive at the moment,” says Rebecca, “we may find that things may slow down a bit over the summer once the stamp duty break ends, but due to the current uncertainty of foreign travel, those who budget for summer travels abroad may have extra money to put towards a move.”
Rebecca continues, “With the stamp duty deadline on the horizon, and solicitors and conveyancers extremely busy, if your house purchase isn’t already well under way, it’s unlikely you’ll be able to take advantage of the tax relief now, but the market will remain busy as lockdown restrictions continue to ease and more homes come on the market.”
Will the upward trend continue?
At the moment, it’s hard to say exactly what the future holds for the market. Rebecca says,“We’re yet to see the full impact of mortgage payment holidays taken over the last twelve months, and whether or not these will impact credit scores and the ability to borrow in the future. The way these have been recorded may differ depending on lender, which could affect people when they come to re-mortgage.”
But for now,buyer demand, the relaxation of social distancing measures and government support will add to consumer confidence, keeping the market bubbling away both in the short-term and potentially well into 2022. Research from Savills indicates that whilst London and the South East may initially lead the house price growth, as we go into 2022 there will be more regional growth in the North West and Midlands.
Homeowners are an important part of the UK’s economy, and their contribution to the GDP,through the demand for newly built homes, or through buying and selling existing homes, will ultimately help to support our economic recovery from the pandemic.
Will this housing market mini boom continue? Only time will tell.
Whether you want to save money on your mortgage, or are looking to upsize, why not chat to our team who can help you explore your options? Rebecca Burden, our resident Mortgage and Protection Adviser is on hand, call 07738 492284 or emailrebecca@bluerocketmortgages.co.uk
Your home(or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.
