The UK has experience an unprecedented boom in house prices. According to Halifax, there was a jump of around 1.4% in April, which took the average selling price to just over £258,000. This translates to an increase of around £20,000 for the average house over that period.
This has been driven, albeit indirectly, by the pandemic and the associated lockdown. If you’re thinking about buying, it’s worth also thinking about what’s contributing to this trend, and whether it’s likely to persist in the long-term. After all, if prices are only going to continue to spiral upward, it makes sense to make the investment sooner rather than later.
What’s driving the boom?
Arguably the most important factor in the current surge in demand is the stamp duty holiday. This comes on top stamp duty already having been waived for first-time buyers. The relief is set to be phased out over two stages from June to September, so we might see the boom slow down by then – but that isn’t to say that house prices will actually decline. Data from Search Acumen suggests that around 171,000 extra property transactions have gone through every month because of the stamp duty holiday. This is a boost of around 22%, which many of the nation’s property law firms have struggled to cope with.
The second thing to consider is the widespread shift to home working. Given that so many of us now have experience of working from home, and that many of us might have decided to work from home on a permanent basis, it’s logical to expect homeowners to look for more spacious accommodation. Properties whose spare bedrooms have been pre-converted into office spaces might prove to be desirable, especially if working from home becomes a widespread phenomenon in the long term.
We should also think about the amount of money that would-be homeowners have managed to save up over the course of lockdown. With no leisure activities, and no holidays to go on, many have managed to save thousands of pounds that might otherwise have been frittered away. The availability of this cash spells good news for sellers, who find themselves in a market where every customer can be pushed that little bit further.
For many, the cost of making a sale is prohibitive. Competent conveyancing solicitors, whose job it is to ensure that the transaction is smooth and legally sound, charge for their services, as do removal companies, estate agents, and other essential pillars of the property industry.
The broader economic picture is grim, but from the point of view of the housing market, it’s considerably rosier than it was following the housing crisis, which had financial causes, and was not so easily remedied through government intervention.