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Figures from Halifax for April published this morning indicate a month-on-month average increase of 1.4 per cent, with a year-on-year rise in property values of 8.2 per cent, bringing the price of the average UK home to £258,204, the highest rate of annual growth in five years.
Russell Galley, Managing Director, Halifax explains that the current demand for homes in the UK means that “In cash terms, almost £20,000 has been added to the value of the average home since the market had essentially come to a standstill in April 2020.”
Russell adds: “The stamp duty holiday continues to add impetus to an extremely active market, magnifying the current shortage of available homes as buyers aim to take advantage of the Government scheme.
“The influence of the stamp duty holiday will fade gradually over the coming months as it’s tapered out but low stock levels, low interest rates and continued demand is likely to continue to underpin prices in the market.”
Jason Tebb, Chief Executive Officer of property search website OnTheMarket.com agrees: “The figures from Halifax this morning confirm what we’re hearing on the ground, which is although many people thought that March would see the peak of buyer demand and that the market would wind down from there, with the extension of stamp duty relief until June, those who thought they had missed out started their search in earnest in April.
Laura Hamilton discusses rise in house prices
“This led to competitive bids between buyers, which pushed up agreed prices and has contributed greatly to what we would now suggest is one of, if not the, busiest housing markets in living memory.”
Jason continues: “It’s highly likely that the current momentum will continue in the short term, with three contributing factors at play.
“Firstly, as lockdown measures continue to ease, vendors who previously weren’t very confident about allowing viewings will now hopefully feel more comfortable about doing so, prompting them to list their property for sale; more stock creates more choice which typically stimulates discretionary movers.
“Secondly, mortgage lending remains competitively priced, with good levels of repayment affordability for those who are able to secure borrowing and the return of low deposit products to the market.
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“Thirdly, the Bank of England upgraded its growth forecast for ‘UK PLC’ within the last few days, citing that the post-Covid recovery is the strongest since 1941.
“Although no doubt there will still be choppy waters to navigate in the months to come, combined these are all ‘feel good’ factors for those who are currently considering moving home.”
Andrew Montlake, Managing Director of the independent mortgage broker, Coreco also believes that the current status quo will be maintained over the summer and says: “The Halifax have hit the nail on the head, namely that even when the stamp duty holiday ends, people’s demand for something entirely different from their homes will continue to drive transaction levels for some time yet.
“These days, people want more space to work from home and a bigger garden in the event of future pandemics and lockdowns.
“Covid has changed the rules of the property game fundamentally; in the age of the pandemic, the mantra of location, location, location has become an irrelevance.”
“In the short-term, the Government’s mortgage guarantee scheme will continue to support demand among first-time buyers, and this will ripple up through the market and maintain a certain level of transactions.”
Andrew does, however, share a note of caution as he concludes: “The concern is that people who have rushed to buy property to make the most of stamp duty savings could regret it if the market starts to cool down. We’re not expecting a material fall in prices in the short- to medium-term, as supply is so low and money cheap, but a minor correction may be on the cards.”
You can hear more from Louisa and Andrew on the UK housing market in latest episode of The Property Show Podcast.
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