Autumn 2021 is definitely one to watch for the UK property market, as two key government interventions to support the economy during the Covid pandemic come to an end.
While the stamp duty holiday and the UK furlough payment scheme close for good on 30 September, reports suggests that this will have little impact on the market. Leading mortgage provider Halifax and others say lifestyle driven demand and high average prices will continue into 2022.
In this blog post, we provide an overview of where the UK property market is at as we enter autumn and the factors that will influence performance over the coming months.
House price performance
The summer was a period of record levels for buyer activity with demand for more space and greater home working. Average prices going into September rose by 0.7 per cent, according to Halifax, one of the UK’s biggest lenders. The gradual ending of the government’s stamp duty holiday contributed to a cooling of annual house price inflation to 7.1% a five-month low in England.
With a limited supply of properties for sale – a long term issue for the UK property market – the trends for higher asking prices are likely to persist through the autumn and are unlikely to be reversed once the remaining tax break ends later this month.
That said, there is expected to be a softening of the market from 1 October when the stamp duty land tax returns to normal levels, but tight supply will maintain strong growth into the spring. Rightmove, for example, suggests there is a 225,000 shortfall in the number of new properties coming to market. The UK’s leading property website predicts buyer demand will return to more normal levels with prices gradually returning to a more stable trajectory.
The rise in home working, a shift in buyers needs and a move away from city centre locations is likely to continue driving the UK property market. Record low interest rates are also expected to continue for the foreseeable future supporting the availability of good mortgage deals. That combined with incentives for first time buyers add to the prospect of continued strong performance.
Confidence remains high
Halifax in their forecast for the rest of 2021, meanwhile, suggests that with job vacancies at a high and consumer confidence returning to pre-pandemic levels, the impact of the end of the government’s furlough payment scheme will be minimal.
While there is a strong push in the UK to bring people back to the office, many businesses are adopting a hybrid approach allowing people to continue to work from home on some days. That is continuing to drive demand for properties that have the space or technology in place to facilitate this.
Budget and government policy
Rishi Sunak, the UK government’s Chancellor of the Exchequer has confirmed 27 October as the date for the next autumn budget. He is expected to announce plans to support public services and revive the economy with £140bn of extra spending.
The government has also pre-announced increases in household taxes to support the NHS and improve social care. The 1.25% rise in National Insurance contributions, won’t come into force until April 2022.
GRE Assets has been delivering high quality, well connected homes in the UK and Spain since 2006.
