The Covid-19 pandemic has certainly brought a number of evident and less evident changes across the world. 2020 will forever be remembered as the year of lockdowns, social distancing, dramatic shifts towards consumers being more active online than ever before, and more. Globally, markets are seeing significant rises in online shopping, online education, and VR technology is becoming more and more attractive.
In such an environment, it’s only natural that the housing market has a response. In this article, we will look at the house prices after Covid-19 in the UK, see what stamp duty changes homeowners must adapt to, explore some predictions about the future, and discuss how getting a mortgage is different in pandemic times. We hope that you’ll find this information useful if you are a homebuyer, seller, or simply someone interested in the property market.
The Coronavirus housing market in the UK: What does it look like? Surprisingly or not, the UK property market is maintaining its stability despite the Coronavirus outbreak and the new lockdowns. Let’s take a look at the numbers. House prices have grown by nearly 6%, with the average price for a house being £227,826. In November, UK house prices reached an average of £250,000 for the first time in history. According to research, the price growth per month is 0.8%. Before the second lockdown, transaction numbers were high, with 98,010 registered property sales in September, 21% more than the sales announced in August. During the first week of November, valuation appraisals rose by 38% in comparison to the last week of October, despite the lockdown. The market is noticing unusual growth levels of demand and the annual house price inflation grew to 7.5% in October. One explanation behind the jump in house prices is the Stamp Duty reduction.
Will the stamp duty cut affect house prices?
In order to support the housing market during these uncertain times and stimulate potential buyers to invest in real estate, the UK government has cut off stamp duty on house purchases exceeding £500,000. The stamp duty cut will be active until the 31st of March 2021. Before the cut, stamp duty was obligatory for properties over £125,000 or £300,000 if you were a first-time buyer. Homebuyers of properties that cost £500,000 will be able to save £15,000, which is not a small number for most.
Middle-class homebuyers in the more costly areas of England are expected to benefit the most from the cut on stamp duty. This new relief is expected to increase the house prices temporarily mainly on real estate in attractive and expensive locations. However, as the future remains uncertain, some homeowners may be concerned about the investment. What if the house value depreciates dramatically in the next year?
Getting a mortgage during Coronavirus
With the higher demand for new properties with larger free spaces and open areas, mortgage valuations take a lot longer to be processed due to the limited number of experts available to handle the applications. Already, there have been requests for the extension of the stamp duty cut in order for the trade bodies to be able to handle the demand and complete the deals. Although mortgage deals remain open for those moving homes, for first-time buyers, and for people looking to remortgage, the rates are experiencing constant shifts. Some lenders may extend your mortgage offer for up to half a year if your property purchase has been held back due to the pandemic. It may also be a bit tougher for first-time buyers and people purchasing new properties to move into to afford a mortgage due to the higher deposits demanded by some lenders, sometimes ranging between 10% and 15%. How will Coronavirus affect the housing market in the future?
Before we dig into the numerical expectations on house prices, let’s look at the way things are done on the market in general. How are property viewings affected and what are people interested in?
The UK’s second lockdown may already be a reality but the housing market remains open for business. Covid safety guidelines must be followed, however. Buyers and sellers are still able to communicate with lettings agents, arrange property viewings, move into a new home, and visit properties in preparation for sale or rent. Although property viewings are available, there may soon be a new trend of online house viewings via free video platforms or professional virtual property viewings technology.
In terms of customer demands, more and more people are interested in purchasing properties with more space, open areas such as gardens and large balconies, and some are even considering moving a bit outside large cities to live in the suburbs. The reason for this could be traced back to the lockdowns and social distancing that we’re still learning how to practice. Being in an open space becomes more and more of a privilege that most are eager to have access to.
When it comes to the raw numbers, forecasts reveal that London house prices are expected to grow by 21% by 2025. we’re already seeing a shift towards work from home that may not be so temporary. Once employers and employees establish the ease of this practice, the trend may as well stick around in the future. Considering this, buyers are likely to put a priority over the available space in the property over the location. On the other hand, there are concerns that once the stamp duty holiday is over, transactions will dramatically fall. How certain are the times ahead truly?
A global pandemic as the one we’re currently struggling will never bring certainty. There are so many external factors that have an influence on the UK house market that it’s almost impossible to surely predict anything. The fact is that currently, house prices are growing, demand is strong, and the UK government is doing everything possible to continue supporting homebuyers. Hopefully, this trend will continue onwards as the lockdown deepens and stamp duty is back on track.