Spring has arrived and there is very much a hopeful air surrounding the UK property market. Chancellor of the Exchequer, Rishi Sunak’s budget announcement last month revealed the stamp duty holiday would be extended, along with the introduction of the mortgage guarantee scheme. This provided the positive news that potential house buyers were hoping for and has boosted activity within the market.
In this blog post, we assess how the UK property market is performing so far in 2021, with particular attention to housing supply vs demand, mortgages and house price performance.
Housing supply vs demand
Spending more time than ever at home in 2020 has made people increasingly eager to find their dream home. While this is positive news for developers and those wishing to sell, the challenge this poses is ensuring that there is the housing supply to back up this demand.
Chief economist at the Royal Institution of Chartered Surveyors, Simon Rubinsohn recently confirmed these concerns that “demand is outstripping supply.” The same report found that 42% of those surveyed saw an increase in new buyer enquiries. The progression of new build developments will be vital in re-establishing a balance between supply and demand.
Rishi Sunak announced in March that the housing measures announced in the Budget 2021 would ignite a shift from ‘generation rent’ into ‘generation buy’. There is no denying that the number of incentives within the market is making getting on the property ladder more viable for first time buyers. This has created a sense of urgency and we would expect demand for mortgages to increase.
Data from Rightmove supports this, with traffic to its mortgage calculator increasing by 85% within 30 minutes of the Budget announcement. It also predicts that the extension to the stamp duty holiday would result in the completion of an additional 300,000 transactions, which is extremely encouraging.
House price performance
Despite economic challenges brought on by the pandemic, UK house prices rose by 7.3% in 2020. Activity in the UK housing market has been promising in Q1 2021, but experts predict that it won’t be until 2022 and beyond that we see significant house price growth. For instance, property group, Savills, forecasts growth to total 21.1% in the five years to the end of 2025.
They also identified the South East as among the locations that will lead house price growth in 2021. This comes as no surprise to GRE Assets, as this is a key area of interest for us due to the level of regeneration, connectivity and high quality of living the region offers.
GRE Assets has been delivering high quality, well connected homes in the UK and Spain since 2006.