House Prices and Rents Continue to Grow

Due to the ongoing lockdowns, the property market has been very slow so far this year. Sellers have been wary of taking a gamble with the risk that buyers may not be able to fulfil their contractual payment agreements due to loss of earnings. And buyers, too, are apprehensive, having lost their financial security – and especially now furlough is about to come to an end, and with more job losses imminent. All this financial uncertainty both now and in the foreseeable future has denied people the chance to get on the property ladder, and an extra blow is the upcoming end of the Stamp Duty Holiday. Now people are having to dip into their savings just to survive, spending the money they had been putting aside for a housing deposit, so under the present circumstances, they have had to come to terms with the fact that they would not be able to afford the 10% minimum deposit required.


house price increase


What has changed recently?

– Originally scheduled to finish at the end of March, Rishi Sunak decided to extend the Stamp Duty Holiday until the 30th June. This now ensures that any buyers in the process of purchasing a home are not caught short and are able to complete their transactions. It also encourages more first-time buyers to finally own their own home. The Stamp Duty Holiday saves home buyers an average of £10,000, and a maximum of £15,000 on purchases of £500,000 or more (common in London). This was all in attempt to revive the dying housing market once again. 


– There have also been 95% mortgages re-introduced by the chancellor. This helps buyers who, in the current lockdown situation, cannot afford a large down-payment. From the lenders’ point of view, they too have been offered assurance that should buyers default on payments of purchases up to £600,000, the government has offered them back-up security. 


Why have house prices increased?

Unfortunately, because of the advantages of the Stamp Duty Holiday and the 95% mortgages, lenders have taken advantage – and because of the sudden increase in demand for housing and the shortage of available homes, sellers are increasing the sale price of their properties! Many people have been forced to move or downsize due to low income imposed by the lockdowns, and there has been on average a £20,000 increase in price per home.


Oh dear, how will I still be able to afford to buy?

As the economy is still in a very precarious situation, it is impossible to predict what will happen to house prices and rents in the coming year. However, you can still hold on to the hope that with the financial support offered by the government, it is still a good time to take advantage of the support available and finally get onto the property ladder.


In the private sector, rent prices continue to increase at an alarming rate, and with the 95% mortgages and Stamp Duty Holiday still around at present, it might be a good idea for those renting to consider finally owning their own home. Mortgage payments would be either the same or even possibly less than the rent they are paying at the moment. This has been estimated to cause a 75% increase in ex-rental tenants becoming first-time buyers.

A Positive Impact

The good news is that, due to the government’s success in implementing the building of new homes, this will have a positive impact on house and rental prices in the future. But at present, unless the availability of housing increases rapidly, house prices will remain as they are or continue to increase. 


However, if it is possible for you financially at present, now is still a good time to take advantage of the current help-to-buy schemes in place, so don’t give up hope just yet of owning your own home.

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