The Office for National Statistics (ONS) announced that after experiencing two consecutive quarters of economic decline, the UK economy is in recession. This is the UK’s first recession in 11 years, with the previous one related to the global financial crisis.
It shouldn’t be a surprise to learn the economy contracted by 20.4% between April and June this year. For many industries, lockdown was severe and brutal.
However, there is optimism and positivity surrounding the housing market right now, and there are two key factors for this:
1. The heightened spike of activity when the housing market re-opened
2. The stamp duty holiday announced in July 2020
Even with so much economic uncertainty, the housing market was always set to re-open positively. It is believed around 370,000 transactions were halted because of lockdown. It was inevitable many buyers and vendors would attempt to resurrect these deals as soon as they had the opportunity.
It must also be remembered that the impact of the COVID-19 pandemic affected many people’s circumstances. People lost jobs, households had to move for work, and many personal relationships ended or moved to a higher level. All these factors are commonly cited when people list reasons for moving home, so it is easy to see why there was a boost in housing market activity.
Buyer demand has changed
It should also be remembered that people’s priorities have changed, and this influences some household’s decision to move home. The leading property portals such as Rightmove and Zoopla have cited surveys which shows buyer and tenant demand has changed because of the pandemic.
While gardens and larger homes have long been essential features for property buyers and tenants, they are now even more critical. There has also been an increase in demand for home office space while many people will re-evaluate their surroundings in light of increasing remote working opportunities.
There has been an overstatement of how many people and families intend to flee the city to enjoy rural life, but there will be households looking to make this move. Therefore, there is another strong reason to move home, and this pushes the demand for property to a higher level.
The stamp duty holiday
On Wednesday 8th July, the Chancellor of the Exchequer, Rishi Sunak, has announced an increase in the stamp duty threshold in the Summer Update. The key points of the stamp duty changes are:
• Stamp duty threshold is now £500,000
• This increase in stamp duty threshold is set to run until 31st March 2021
• The increase in stamp duty threshold takes place immediately
While there hasn’t been universal support for the stamp duty holiday, this is to be expected with any political gesture in the United Kingdom. Many industry analysts have taken the lead from the Office for Budget Responsibility (OBR) who expect an additional 100,000 property transactions relating to the stamp duty cut.
The stamp duty holiday is likely to be useful for several reasons. Many buyers will enjoy a significant saving, often up to £15,000 in stamp duty fees. This lowers the amount of money a buyer needs to find upfront, which is a hugely beneficial saving.
Also, with a deadline in place, there is a sense of urgency in the market. If the stamp duty cut were permanent as opposed to a holiday, most prospective buyers wouldn’t be compelled to move soon. They would know the saving was in place for later. However, as the deadline ends on 31st March 2021, people need to move sooner rather than later to take advantage of this.
While each house sale is unique, it is not uncommon to suggest a timescale of between 15 and 25 weeks to go from start to finish with a property deal. If everything runs smoothly, a property deal can be concluded in around three months. If issues arise, it is not uncommon for things to run into six or seven months.
It should be remembered that many industries are operating slowly at this time. Mortgage applications take longer, and with social distancing measures in place, professionals aren’t exchanging paperwork as smoothly as they should. Therefore, buyers and vendors should prepare themselves for property deals taking slightly longer right now.
With the stamp duty holiday deadline in place, there is a genuine sense of urgency. As of the start of September, there are 30 weeks to the deadline. Suddenly, an expected sales time of 25 weeks doesn’t seem as flexible as it previously looked.
Professional thoughts on the current state of the housing market
In the latest house price index from Halifax, house prices increased by 1.6% from June to July. This represents an annual change of +3.8% from 2019, showing the start of a “mini-boom” in the market.
The Managing Director of Halifax, Russell Galley, believes the stamp duty cut has strengthened the housing market’s spike since lockdown. He states that confidence is growing in the market and that the future of the UK housing market is “brighter than expected”.
The latest House Price Index figures from Halifax show house prices rose by 1.6% from June to July. The July 2020 figure changed +3.8% compared to the July 2019 numbers, and this has been classed as a “mini-boom” by observers.
What are estate agents experiencing right now?
At Agent Media, we work closely with agents, ensuring they reach their audience. We are currently dealing with many agents, across England and Wales, who are experiencing significant demand for property in the sales and lettings sector. A common request we are hearing from agents is they need support in connecting with homeowners and vendors because there aren’t enough properties to meet demand.
The heightened demand is seeing multiple buyers making offers on single properties. Information provided by Hamptons estate agents indicates 30% of properties sold in the past four weeks have been subject to a bidding war amongst motivated buyers. The company claims homes are selling for 98.6% of their asking price. This is something which other agents are also experiencing or intimating to us.
For now, there is a heightened level of demand for property, and it is vital agents position themselves to capitalise on this activity.
We offer an extensive range of social media marketing, content and advertising solutions which can be tailored to meet a select audience and achieve specific outcomes. If you are currently keen to connect with local homeowners and people who wish to sell, we are ideally placed to assist you.
Contact Agent Media today to see how we can deliver a tailored promotional campaign that ensures you have the supply of homes required to meet the current level of demand.
firstname.lastname@example.org or direct line 01480 589003.
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