The English housing market reopened in mid-May, with Scotland, Wales and Northern Ireland following suit a little while later.
In its August market report, Nicky Stevenson, MD of Fine & Country UK, says the housing market has seen increased demand across the board.
“According to Rightmove data, the number of monthly sales agreed in England during June were up 15% on last year.
“Zoopla has also reported that applicant demand has doubled. HMRC figures reveal that in the UK, 63,250 transactions completed in June, up 31.7% on May, but still 35.9% lower than 2019.
“It will take time for the reported increase in newly agreed sales to complete and be reflected in the transaction figures,” she says.
Stevenson says that house price indices have been varied with Nationwide reporting -0.1% annual growth in June, which is likely to reflect cautious lending in uncertain times.
On the other hand, Halifax reported 2.5% annual growth and Hometrack a 2.7% increase.
“House price indices are likely to reflect sales agreed before lockdown, and therefore we are yet to understand the impact increased demand has had on prices.
“Rightmove House Price Index, based on average asking price of properties, reports a 3.7% annual increase.”
With regard to the stamp duty holiday from 8th July 2020 to 31st March 2021 in England and Northern Ireland, Stevenson says that she believes it will benefit existing homeowners and investors more than first-time buyers.
“In 2019, 90% of all sales were under £500k, therefore the majority of transactions will be exempt. The change will have the largest benefit to both existing homeowner and investors, as first-time buyers were already exempt of paying stamp duty on purchases up to £300,000.
“The stamp duty holiday aims to sustain the demand experienced since the housing market reopened, with early indictors already reporting increased demand.
“According to Rightmove the number of monthly sales agreed in England increased from a 15% to a 35% year-on-year following the stamp duty announcement.
“Wales and Scotland have announced their own stamp duty holiday until 31st March 2021 with properties under £250,000 being exempt. It will be interesting to see whether it has the same impact in those regions.
“Despite the economy’s slow recovery, the months ahead look positive,” adds Stevenson.
“Low mortgage rates will help support higher prices and the stamp duty holiday will help maintain demand.
“The end of the furlough scheme in October could weigh on market activity, however forecasts remain optimistic.
“The OBR central scenario expects 750,000 transactions in 2020. Given 444,280 completetions in the first six months, the current momentum and stamp duty holiday, this could be an underestimation.
“Longer term, transactions in the central scenario are expected to reach almost 1.5 million in 2021.
“The upside and central scenario expect house prices to remain subdued in 2020, however both anticipate strong price growth in 2022.”
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