Despite everything else going on this year, it’s been impossible to ignore the hive of activity going on in the residential housing market. Residential Consultant, Erin Gallacher, explains what’s caused this mini-boom and examines the particular areas of the market that have been driving it.
It’s fair to say that houses have been flying off the shelves: for sale signs everywhere and offer bidding wars between prospective buyers have been the norm in the latter half of what has been anything but a typical year.
Before COVID hit, the property market was warming up after a prolonged period of uncertainty; mainly Brexit and the late 2019 election. This pent-up demand was only starting to release when the UK-wide lockdown hit in late March, putting a halt to everything. Fast forward seven weeks of home confinement and the desire to move was an even hotter topic than at the beginning of 2020. Almost immediately, reports emerged of new buyer priorities: homes with gardens (or near green spaces), a spare room to accommodate a home office, more general living space and even garages for home gyms! Aware that we are not yet out of the COVID woods, the space in the place we call home has a new priority.
It’s no surprise then that the Government’s stamp duty holiday announcement was the final nudge of encouragement for those undecided about whether to take the plunge. With up to £15,000 tax savings on offer, it’s a bit of a no brainer for those in the right financial position!
So, which areas of the UK property market have seen the most activity? According to research from Halifax, the demand for more space meant a surge in the number of us looking for ‘larger’ homes, driving up prices for these properties. For typical detached houses, prices have increased by over 5% since March 2020. In comparison, terraced and semi-detached properties saw a 4% increase, and flats only 2.5%.
Of course, the primary demographic looking to purchase detached houses are existing home-owners, rather than first-time buyers. In fact, the research shows that for home-movers, house prices have increased by an average of 4% from March to September, whereas first-time buyers have only seen a 2.4% increase in the same period.
While the price of detached properties has risen in all regions of the UK, the North West and Yorkshire and Humberside saw the most significant inflation (over 6%), quickly followed by the East Midlands and the South West; all these areas saw at least a £20,000 price increase for detached properties! The regions with the least growth, the South East and Greater London, saw only a 2% increase on the price of their largest properties, likely weakened by the stamp duty holiday threshold of £500,000.
Managing Director of Halifax, Russell Galley, sited the considerable demand for larger properties as the driving force behind the “mini-boom witnesses in the housing market since lockdown restrictions were first eased over the summer.” He continued, “This level of price inflation hasn’t deterred would-be buyers though, as in the three months up to September we received more mortgage applications from both first-time buyers and home-movers than at any time since 2008.”
The substantial tax savings on offer until the 31st March 2021 mean that many can consider larger, more expensive properties which may have been financially unachievable before 8th July 2020. Further motivated by the desire for more space, it makes complete sense that this sector of the property market would be the driving force behind the record-breaking numbers of sales and mortgage applications.
If you’re still hoping to make the most of the stamp duty holiday and purchase your next home, get in touch today to find out how much you can borrow and the types of residential mortgages that will be available to you. You can call me, Erin Gallacher on 01625 416392 or email me firstname.lastname@example.org and I’ll be more than happy to assist you!