The Covid-19 pandemic put the UK’s housing market on hold back in March, which was a hit for developers, agents and prospective buyers alike. Property portal, Zoopla, estimated that the value of these held sales total a collective £82 billion. With the announcement of a temporary stamp duty holiday by chancellor Rishi Sunak and as the country emerges out of lockdown, things are looking gradually optimistic.
Rightmove has recently released a report, which reveals a ‘mini-boom’ has occurred in the UK property market. In this blog post we will explore the findings of the report and their implications for property investors considering the UK market.
What are the findings of the Rightmove report?
Property website, Rightmove, has published its House Price Index report this month, which revealed as Britain gets moving an ‘unexpected mini-boom pushes prices to a record high’.
Among the key findings was that the average asking price of property being put on the market is 2.4% higher than in March before the start of lockdown. Buyer enquiries are also up 75% in Britain and the number of monthly sales agreed is up 15% in England, year-on-year.
What factors led to this ‘mini-boom’?
The UK housing market was looking strong until it was interrupted by the coronavirus pandemic, which means demand didn’t disappear it just couldn’t be met due to the restrictions in place. As we emerge out of lockdown, the sense of urgency for people to buy new homes and a resurgence of the demand we saw in Q1 2020 has contributed to this ‘mini-boom’.
Alongside this, Chancellor of the Exchequer, Rishi Sunak announced a temporary stamp duty holiday on the first £500,000 of all property sales in England and Northern Ireland earlier this month. This will be in place until the end of March 2021 with the aim of incentivising buying property in the UK. As we revealed in a recent blog, prospective buyers are also reassessing their priorities and access to green space, balconies and terraces are becoming must-haves for new homes. These two factors have also contributed to an increase in house prices and enquiries.
Miles Shipside, Rightmove director and housing market analyst explains this further: “The busy until interrupted spring market has now picked up where it left off and has been accelerated by both time-limited stamp duty holidays and by homeowners reappraising their homes and lifestyles because of the lockdown.”
What does this mean for investors?
The increase in asking prices is extremely positive for investors with existing property assets in the UK. The findings mean that those considering selling on property will likely get a strong return on investment as the UK property market experiences a record month.
Similarly, the increase in enquiries is also good news for investors and is something we have direct experience of at GRE Assets. Our recent Help to Buy event at Riverside Park was a huge success and led to a number of properties coming under offer, ensuring strong capital growth.
Furthermore, the stamp duty holiday means that while the pre-existing 3% surcharge on purchases will still apply to investors, as Buy Association explains in a recent article, those ‘spending less than £500,000 will only need to pay 3% tax on top of the purchase, as opposed to the previous 5%.’ This holiday also means that those selling existing property will be able to liquidate faster and at a better price. With this incentive in place until 31 March and more people looking for properties with access to outdoor space and balconies, something which as a company we champion, we are optimistic that this will continue over the coming months.
GRE Assets is a property investment company with major residential schemes in the UK and Spain.