Since the Covid19 pandemic hit, home sales have continued to thrive through 2019 and 2020 with buyers and seller continuing to show high interest. Although it may seem somewhat counterintuitive, house prices soared during 2020 and continued to rise throughout the year. Despite necessary Covid restrictions forcing online viewings, and other social distancing safety measures being taken, home sales continued to thrive.
Buyers with deposits in over 10% fared especially well during the crisis, finding favourable mortgage deals readily available. Those with deposits between 5% and 10% were not as fortunate and have been hit the hardest as lending choices become increasingly limited. Since the start of the global pandemic, the number of mortgage deals available has more than halved, reducing purchasing options for many buyers. However, for interested purchaser’s, help may be at hand, with several lenders recently relaunching 90% mortgage deals.
The recent housing boom has been partially attributable to the recent government stamp duty cuts that can save buyers up to £15000 on home purchasing costs. Since last summer the reductions and subsequent savings have bolstered home sales to new levels. Recent government data shows that sales in 2020 achieved a 32% increase with over 129,000 property deals being completed. However, as the pandemic continues into 2021 and the country is experiencing its third lockdown, levels may be starting to drop. Some experts believe that sales numbers will soon slow down once government support schemes and stamp duty relief ends.
In the interim, the price of property has increased at a rate of 1.2% per month according to the Land Registry, and many high street lenders are also reporting increased sales values. Optimism remains high with agreed sales during 2020 taking 14 days faster on average than in the previous year. Average home prices have also shown a year-on-year increase through December 2020.
Online real estate companies have weighed in with predictions based on their home sales data:
- Zoopla expects to see annual growth of up to 5% this year
- Rightmove predicts a 4% rise
Even with these positive increases, both businesses expect to see a slowdown from the middle to the end of 2021 as stamp duty cuts come to a halt and people are less inclined to move as a result.
An extension of the stamp duty holiday has been suggested, and an online petition was submitted to the government demonstrating strong support. Several industry trade bodies have requested the scheme be extended through 2021 to provide relief for home buyers beyond the current deadline of March 31st. Calls for the stamp duty scheme to be reviewed have been rejected by the government so far.
Indicators show that home sales are beginning to drop with growth slowing to 6.4% after the recent high of December 2020. With the removal of the stamp duty holiday and the possibility of economic recession, home sales may continue to fall. There is also a growing delay in home transactions as solicitors, conveyancers, and lenders try to keep up with the recent demand. For buyers that are racing to complete transactions before the March 31st deadline, there is a chance they could miss out on the financial relief completely
As thousands of people line up to receive their Covid vaccine there is the hope that life will return to normal in the near future. But that may not be enough to counter the damage already done to the economy and the removal of financial assistance from the government. While the impact may not cause home prices and sales to plummet immediately, most experts predict a definite slow down starting in the second half of 2021.