The latest house price indices are demonstrating the property market is going to remain red-hot across the UK. But what is expected for the second half of 2021?
Since the start of 2021, house prices in the UK property market have surged with reports sketching a clear picture of how strongly the property market is currently performing. According to Zoopla’s recent House Price Index, 2021 is going to be one of the top 10 active property years since 1959. Around 1.5 million homes in the UK are set to see new owners this year, which would be the highest property purchases in the last one and a half decades. The main reason for this whopping 45% increase in the property market as compared to last year is the search for space and the stamp city holiday in addition to a shift in housing preference that will last beyond stamp duty holiday.
The reports reveal some shocking things that happened during the first half of 2021. The demand continues to outstrip supply resulting in increased house price growth by two fold. The buyer’s interest in properties up for sale has seen a 29% boost over last year. And most surprisingly many of the homes are even selling above the asking price. According to Halifax and Rightmove, the average property price in the UK has reached a record high. In May, the average price of property hit £333,564, according to Rightmove, which is 1.8% higher than the all-time high price from the previous month. Data from Halifax revealed the average house price in the UK indicated a historic high, reaching £258,204 for the second consecutive month in April.
According to Robert Gardner – Nationwide’s chief economist, as a result of the stamp duty tax, the housing market has seen a “complete turnaround” in the past year and is likely to remain fairly animated and positive over the coming six months owing to extension in stamp duty tax. The extra support for the labour market was incorporated in the Budget, especially improving credit availability, given continued low borrowing costs, and with a lot of people still excited to move because of changing housing preferences in the wake of the Covid-19 pandemic.
With the housing market in the UK booming, many pundits are foreseeing a property price crash is on the horizon. The market has flourished strongly since the first lockdown ended, it is now said that we are in a property bubble with a striking rise in both volume and values of transactional activity recorded. Many experts and property gurus anticipate the property market will strive to retain the boom in activity and prices at this rate – a plateau is bound to appear. While a lot of experts disagree with this notion and believe it is not necessarily valid that every boom must precede bust. For them, this kind of boom is unlikely to overturn as long as demand sustains at particular levels and the property market remains attractive.
Having said all this, one critical date of attention will be 1st July 2021. After 1st July the stamp duty holiday is scheduled to begin narrowing down and by 1st October it will return to the previous rate – No doubt, the massive tax relief has played a vital part in catalyzing the property bubble. The Queens’ Speech included a promising show of intent to prioritize the property sector in the UK; headline strategies to overhaul Britain’s planning and management system will surely be welcomed warmly by the masses.
The positive effect of the pandemic on property prices must, ultimately, wear off but signs are encouraging, indicating that the boom will simply plateau instead of turning into a complete wreck. We must emphasize the need for creative and bold reforms by the Government to facilitate sustainable growth in the long term like taking advantage of the approx. 650,000 vacant properties in England.
Sources:
Mortgage Finance Gazette
Buy Association
The Guardian
