Here we share the latest housing news based on data shared by Rightmove, Zoopla and the Halifax. We also update you on the stamp duty holiday which is due to end on 31 March 2021.
The housing market has had a busy start to 2021 although the impact of the stamp duty holiday coming to an end and the wider economic impact are expected to slow down house prices from Q2. In view of the potential stalling affect that will happen when the the stamp duty holiday ends (there were price dips when previous stamp duty holidays ended), a petition from 110k people was submitted to Parliament seeking a debate on this key issue. The Government initially responded to the petition on 10 December, saying:
'The SDLT holiday was designed to be a temporary relief to stimulate market activity and support jobs that rely on the property market. The Government does not plan to extend this temporary relief.'
A date has not yet been set for the Commons to debate this key issue. Separately, officials and ministers are considering long-term plans to replace stamp duty and council tax with a national property levy. These changes are not imminent.
January has seen a price decrease, with property prices falling by 0.9% (-£2,887). Currently there are 613,000 sold properties which are subject to contract. On the basis that completing a sale is now taking 126 days (4+ months), it seems unlikely that property transactions recently accepted will meet the 31 March 2021 deadline. Rightmove indicate that around 100,000 households will face an unexpected tax bill as they miss the deadline (and this shortfall will amount up to £15,000).
On the bright side, visits to their website is up 33% compared with January 2020, the number of buyers contacting estate agents is up 12% and agreed sales in January are up 9%.
Tim Bannister, Rightmove’s Director of Property Data says:
“As we enter the new year and a new lockdown, the housing market remains open but is focused on the imminent end of the stamp duty holiday and on the challenges of the pandemic. These major influences on mover behaviour are clouding the 2021 outlook, but Rightmove’s early January market-leading indicators of buyer demand and the number of actual sales being agreed are looking robust, showing that there are many compelling reasons other than the stamp duty savings to make buyers enter the market in 2021. Both metrics are up substantially on the same eleven days of January a year ago, which itself was a brisk start to the year due to buyers reacting favourably to the certainty of a majority government. That certainty at the beginning of 2020 was replaced by nearly a year of pandemic uncertainty, though the major difference between the first lockdown and this one is that the housing market is open.
Movers’ changed housing priorities due to the lockdown can therefore be more readily satisfied, though obviously estate agents will be carefully following government safety protocols, with more offering online viewings to help buyers to make shortlists and to cut down on the number of physical viewings that are taking place.”
”While the tax savings were an added incentive, movers’ desire for more inside and outside space seems to be continuing, and this new lockdown could be a spur to act in 2021 for those who can and who did not do so in 2020.
However, there are still a huge number of sales agreed in 2020 that are stuck in the processing logjam and awaiting legal completion, with many hoping to beat the impending tax deadline. For those who fail to do so, there may be difficulties if they have factored the tax savings into their budget calculations. The challenge of processing so many transactions in less than three months is made even tougher by the new lockdown restrictions, Covid-19 sickness and homeschooling further reducing capacity in conveyancing, legal searches and mortgage lending.”
Learn more here.
Zoopla confirm that they have seen demand levels for property rise on average 40% year-on-year, and in some areas by much more, despite the impact of the housing market closing during the first national lockdown. The flow of homes coming onto the market last year was 4% more than in 2019. The lack of housing stock is putting upward pressure on house prices. Zoopla predict that annual house price growth will rise to 5% and remain at that point until March.
On Boxing Day, Zoopla has reported that on-line activity rose 70.5%, up 9% compared with December 2019. For December as a whole, on-line activity was 33% higher than 12 month previous.
Learn more here.
Halifax have shared the following:
Halifax confirm that average prices were up 6.0% at the end of 2020.
They refer to HMRC data relating to the volume of property transactions - compared to November 2019, there were 19.1% more property transactions in November 2020.
Halifax confirm that mortgage approval levels were at their highest in 13 years (November 2020) based on HMRC data! The latest Bank of England figures show the number of mortgages approved increased by 6.7% to 104,969. Compared to November 2019, mortgage approval rates were 56.4% higher.
Russell Galley, Managing Director, Halifax, says:
“Average houses prices rose again in December, stretching the current run of continuous gains to six months. However, the monthly rise of 0.2% was the lowest seen during this period and significantly down on the 1.0% increase in November. The average house price was therefore little changed, but nonetheless still reached a fresh record of £253,374.
2020 was a tale of two distinct halves for the housing market. Following a strong start, the first half was dominated by the restrictions on movement due to COVID-19, and prices were subsequently down 0.5% at mid-year as the market effectively ground to a halt. However, when the market reopened, prices soared as a result of pent-up demand, a desire amongst buyers for greater space and the time-limited incentive of the stamp duty holiday. All this left average prices sitting some 6.0% higher at the end of 2020 when compared to December 2019, a notably strong performance given the anticipated impact of the pandemic earlier in the year. Whilst the annual rate of inflation did fall compared to November (+7.6%) to stand at its lowest level since August, it should be noted that this also reflects a particularly strong period for house prices towards the end of 2019 as political uncertainty at that time began to ease."
“In the near-term, and with mortgage approvals still sitting at a 13-year high, there may be enough residual strength in the market to sustain prices up to the deadline for the stamp duty holiday and the scaling back of Help to Buy at the end of March. However, with the pace of the UK’s economic recovery expected to be constrained by the renewed national lockdown, and unemployment widely predicted to rise in the coming months, downward pressure on house prices remains likely as we move through 2021.”
Learn more here.
We hope you enjoyed reading the latest insights on the housing sector. As always, do let us have your thoughts.