Back into lockdown
While many had been looking forward to the promise of a fresh start as we ushered in the New Year, a large number of coronavirus restrictions rolled over from 2020 as we re-entered ‘Tier 4’ across the UK in an attempt to reduce transmission rates. This sombre tone was reflected in many of the market predictions by industry experts, with the Office for Budget Responsibility anticipating an 8% fall in house prices.
However, nearly a year into the pandemic, the housing market had adapted – and in some instances – improved, with video viewings a standard part of the buying process and solicitors largely able to accommodate digital signings and ‘virtual completions’. As a result, the market (thankfully) did not grind to a halt in the way we experienced in March 2020.
In the face of relative uncertainty (and to the surprise of many), the suspension of Stamp Duty (England) and the Land Transaction Tax (Wales), in addition to the confirmed continuation of the furlough scheme, provided many buyers with the confidence to pursue their purchases. And with thousands of frontline, healthcare and vulnerable individuals starting to receive the first dose of the vaccination, it seemed a time of relative optimism.
At the beginning of March, the Welsh Government mirrored actions taken in Westminster and opted to suspend the Land Transaction Tax until 30 June 2021, in an attempt to offer ‘breathing space’ to thousands of homebuyers.
A Summer of Spending
And then the fun began.
In tandem with the continued easing of lockdown restrictions as we hurtled towards summer, the demand for property soared. Reports suggested that there was an average of 19 buyers for every one property available on the market.
Added to the mix was an increased level of financial flexibility for many, as lenders offered historically low rates on mortgages (the Bank of England base rate has held at 0.1% since March 2020) and a number of initiatives were introduced to assist first-time buyers, including a 5% deposit scheme.
Additionally, many companies began to formalise their plans for hybrid and remote working. With a more concrete idea of what lay ahead, many reassessed their property priorities. With the work-life balance reconfigured and for some, the removal of the daily commute, buyers were able to cast their search net beyond the city. As a result, the demand for 3-4 bedroom properties with a dedicated home office and outdoor space grew exponentially.
The result was nothing short of chaos. The Residential Property team here at Harding Evans worked at a relentless pace for months to secure as many completions as possible. As we headed towards the end of the Stamp Duty and LLT holiday, the intensity sky-rocketed, with clients eager to sign on the dotted line before taxes were re-imposed.
Settling into September
Autumn continued to be a busy time for buying and selling property, although completions occurred at a slightly more sustainable pace.
Even as Stamp Duty and the Land Transaction Tax came to a close, there was no end in sight for our already exhausted team. The average house price in the UK during the month of August stood at £264,000 – £25,000 higher than the same time last year.
Iain McKenzie, the chief executive of the Guild of Property Professionals, stated that similar to the stamp duty holiday motivating a ‘frenzy’ to buy, the predictions of impending mortgage rates were likely to ‘spur on buyers’ and this is certainly something that the team here experienced.
Looking ahead to 2022
According to recent reports, the 2021 housing market is on track to record the highest level of sales since 2007, with an impressive 1.5 million properties expected to be sold before the year comes to a close.
Personally, I don’t think we’ve seen the end of this ‘buying boom’. While the majority of those desperate to move will have done so, there are still a whole host of buyers primed to place offers as we go into the New Year. Indeed, research by Zoopla suggests that more than a fifth of households plan to move over the next 18 months.
I think we will continue to see a steady stream of families ‘head for the hills’ as the pandemic pushes more people to reassess what they require from their home. As an aside, it will be interesting to see how Government’s react to this mass migration, as there is a renewed importance attached to implementing adequate technology and digital infrastructure to ensure that these more remote, picturesque areas remain connected.
I’d anticipate a rise in both mortgage rates and house prices as we head into 2022. As I mentioned earlier, the Bank of England has held its base rate at 0.1% for an extended period of time. This will have to end eventually, making it more expensive to borrow money once again. As for house prices, the bad news for many is that I believe they will continue to rise. While we may have come to the end of the ‘frenzy’, there is still a notable shortage in certain property types, which will naturally drive up the asking price.
After an intense year or so, and without the range of incentives from governments and lenders on offer, I’d expect to see a more steady 2022 – although I’m sure I said the same about 2021. Whatever we face over the next 12 months, our team are ready to offer their support and guidance – although they are due a well-deserved break for Christmas first!
If you are looking to buy or sell your property, give one of the friendly, experienced Residential Property team at Harding Evans a call on 01633 235145 or 02922 676819 – or get a quick conveyancing quote at www.hardingevans.com
