The latest house price index from the Office of National Statistics (there are others) illustrates how the property market is remaining in full flow across the UK. The March 2021 index shows that the average price of a UK property was £256,405 and the annual price change in UK property was 10.2%. House prices have surged over the past few months with activity levels continuing to climb. While the house price indices from other sources sometimes differ, the reports are showing a similar outlook as to the strength of the current market. But what is expected for the months ahead?
A Busy Year
The property market is on course to have its busiest year since the financial crisis and 2021 is possibly going to be one of the top 10 busiest years since 1959. Over 1.5m properties are set to have changed hands this year, which would be the highest number of sales in 14 years and 45% more than in 2020. The need for more space and the stamp duty holiday are heavily contributing to this strong growth.
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Buyer demand is likely to settle down as the economy opens up but it will remain higher still than previous years. Buyer interest in properties on the market remains 29% higher than last year and a large number of properties are even selling above their asking price. Furthermore, house price growth has nearly doubled in the past year as demand continues to outstrip supply.
Nationwide’s house price index shows an annual house price growth of 10.9% in April, the most significant growth in almost seven years. The average property price according to them is now £242,832, a new record high and an increase of £23,930 over just 12 months.
Shifting property requirements feature highly on people’s urge to move meaning the growth may not necessarily end along with the stamp duty holiday. Also, A Nationwide survey found that 25% of homeowners said they were moving or considering moving as a direct result of COVID-19. Of those moving,, 68% said they would have moved even if the stamp duty holiday had not been in place.
It’s clear that the property market has seen a complete turnaround during the past year. Housing market activity is therefore likely to remain fairly buoyant over the next six months or so, as a result of the stamp duty extension and other incentives such as the 95% mortgage guarantee scheme and the New Help to buy scheme.
Record-Breaking House Prices
There has been an extremely strong house price growth over the past year. It is no surprise that the search for space, instigated by the ongoing pandemic, along with the shift to working from home for many has altered house buyers’ demand and caused house prices to climb at more than four times the rate of flats. In fact, the average cost of a house rose by 5.2% over the last year, while the value of flats rose by just 1.1%.
More than 1.5 million homes are expected to be bought and sold this year, a staggering 45% increase on 2020. The total value of homes sold is expected to reach £461bn, up 68% compared with 2019. Properties are selling within 45 days on average, almost three weeks faster than at the start of the year and the fastest pace Rightmove have ever recorded. Data from Rightmove shows the average price of a property hit £333,564 in May, a new national record and 1.8% above the previous all-time high from the month prior.
Successive lockdowns and the shift in working patterns has had a multi-faceted effect on the housing market. On one hand, it has changed what people tend to prioritise in their homes, as they are becoming Furthermore, with workers being freed up from having to travel into the office every day, living close to work or good transport links becomes less of a priority. With many industries planning to continue to offer flexible working to employees for at least part of the week, the housing market may be set to continue to be just as active for some time yet.
What Is The Outlook For The Housing Market?
The excess in buyer demand and too few homes for sale means that if you decide to sell, (particularly a family home), you are in a good position to secure a sale quickly. Coordinating the sale with the purchase of a new one might not be so easy though, due to the competition for properties currently on the market. However, more homes are expected to appear on the market as further lockdown restrictions ease and the vaccine roll-out continues.
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