Back in May 2020, after over one year of lockdowns, it was impossible to predict what would happen to the housing market after that period of time.
March 2020 – House Prices Stagnate
The government ordered that the housing market be frozen, and property viewings and house moves were forbidden. This prompted a prediction that there would subsequently be a 32% drop in house sales, suggesting that approximately 520,000 house transactions would be put on hold – and this scenario having a massive knock-on effect for the whole housing economy, for both buyers and sellers.
Due to the devastating effects of the lockdowns, many prospective buyers ceased the process of acquiring a property, or were otherwise forced to cancel, due to the fear of a reduction or even total loss of income, and huge uncertainties with their future. This resulted in a sudden influx of available properties on the market coupled with a reduction in the number of buyers. This stalling of the housing market resulted in stabilising house prices, which therefore had not increased much from the previous year.
July 2020 – House Prices Start to Increase
The recovery of the housing market has always been an extremely important part of the overall economic recovery, and so that this could gain momentum, the government urgently needed to get the property market moving once again. In order to try and help this, the government introduced the Stamp Duty Holiday, which helped buyers who were suffering financially due to COVID-19. So, towards the end of the first lockdown, the Stamp Duty Holiday was extended until September to ensure that buyers who had begun the process of purchasing a property could proceed with greater confidence, and first-time buyers could take advantage of the maximum saving of £15,000. This was also fantastic news for sellers, and with virtual property viewings now available, estate agents were keen to get the ball rolling with sales. And as there was now a sudden increase in demand for housing once again, property prices increased by approximately 5%.
April 2021 – House Prices On the Up and Up
In a bid to propel the property market forward, even more, the 95% mortgage scheme was introduced. This certainly worked to increase property buyers even more from the successful introduction of the Stamp Duty Holiday. This new mortgage scheme would allow people with very little savings left to now be able to afford a 5% deposit on a home, and for those wanting to move to a larger home, putting them in a far better financial position to be able to do so. Mortgage lenders also had the increased confidence in being able to offer these mortgages, due to the fact that they were assured by the government that they would have the government’s support should anyone default on their payments. This resulted in a further surge in housing demand, which of course then resulted in sellers realising the opportunity and raising the price of their properties.
May 2021 – House Prices Forecast to Continue Increasing
With all these incentives from the government, along with the promise of “freedom” on 21st June, the general mood of the country has improved a great deal. The devastating effects of the lockdowns has meant that people have had to re-evaluate where they live, and also whether they want to continue working from home on a permanent basis, so many have had to make some home improvements and upgrades to gain space or provide a more suitable work environment. This has added value to their properties. Other people are searching for a greener space or a larger home, and all these reasons for a change in lifestyle and a new way of living has meant that demand has outstripped supply. Because of this, there has been an all-time record high for the number of homes being purchased at a higher price – approximately one in three – in the past month. The average house is now valued at about £256,405, and this trend of house price increases has been predicted to continue into the near future.