House prices flying upwards

Post lockdown demand for bigger homes fuelled a 7.6 per cent house price increase in the year to November.

 

According to the mortgage lender the Halifax, values have grown 6.5 per cent in the five months since June after the housing markets began to reopen. This is the sharpest rate of growth in any five-month period since 2004. The average value of a British home has increased by more than £15,000 in this period to reach a record high of £253,243.

 

Pent up demand and a new desire for more space have driven a post lockdown property buying spree, and an already active market was further fired up in July when the the stamp duty holiday was announced. 

 

To benefit from the tax break buyers must complete on sales by March 31 2021. House prices climbed 1.2 per cent between October and November alone, and in many areas such an increase means price hikes now outweigh the value of the stamp duty cut.

 

Support measures such as the furlough scheme and mortgage payment deferrals have largely insulated the market from the financial impact of coronavirus. According to trade body UK Finance, 127,000 homeowners were on mortgage payment holidays last month. However, these schemes will wind down just as the stamp duty holiday ends and the current Help to Buy equity loan scheme is replaced by a less generous version.

 

The possibility of a no deal Brexit at the end of the year could also hit the economy hard and experts have predicted a market slowdown is on the horizon. Russell Galley of the Halifax warned,  "With unemployment predicted to peak around the middle of next year, and the UK's economy not expected to fully recover the ground lost over 2020 for a number of years, a slowdown in housing market activity is likely over the next 12 months."

 

There is still positive news for the market. While first-time buyers have struggled to take out mortgages in recent months, there are signs that this part of the market is slowly improving. A separate report by industry analyst Moneyfacts found mortgage availability has increased for the second successive month. The firm announced 378 new deals had launched in the past month, the highest percentage increase since November 2014, albeit from a low base. The number of 90pc mortgages has grown from 56 to 88 since the start of November, as lenders including TSB and Yorkshire Building Society returned to the market.

 

 

Collings Solicitors

Altrincham