Buyer boom: house prices expected to reach record highs this Spring
Rightmove predicts that buyers will encounter some of the highest average asking prices for properties this Spring.
The property search site’s latest figures suggest demand for properties is set to outstrip supply, leading to a boost in prices. February saw a 0.8% rise in the average price of properties coming onto the market, equivalent to £2,589. This is just £40 short of a ‘new all-time high’ price for growth.1
It is believed this is largely due to an increase in political certainty, following December’s general election result. The Conservatives remaining in power provided further certainty on Brexit, as the UK went on to depart from the EU on the 31st January.
Rightmove’s website traffic increased by 7.2%, compared to the same month last year, and the property site experienced a record number of visits in January 2020, indicating a growing demand for housing.1
Miles Shipside, Director and Housing Market Analyst for Rightmove, said:
“After three and a half years of Brexit uncertainty, dither and delay, many now seem to have the 2020 vision that this is the year to satisfy their pent-up housing needs.
Now could be an excellent time to get on the market and sell, seizing the opportunity of achieving a quick sale at a decent price.”
Cooper Associates Mortgages saw an 81.3% increase in purchase transactions in December, January and February compared to the year before. This supports the trend that more people are taking action when it comes to buying or selling their homes, in light of increased political and economic certainty. An increase in demand is likely to have an impact on property values, as supported by the Land Registry who reported the following:
“As of December 2019 the average house price in the UK is £234,742, and the index stands at 123.12. Property prices have risen by 0.3% compared to the previous month, and risen by 2.2% compared to the previous year.”2
What does this mean for those looking to buy?
The figures above are unlikely to raise the spirits of people trying to get onto the property market, particularly for those who feel they are stuck renting. While buyers certainly face challenges, mortgage rates remain at a four-year low, benefiting those on their journey to home ownership.3
First-time buyers showed consistent resilience throughout 2019, having seen a 2.8% rise in the number of approved first-time buyer mortgages year-on-year, despite political and economic uncertainty.4 This trend is likely to continue throughout 2020, aided by a new housing scheme for first-time buyers, which is expected to be announced in next month’s budget. How to get onto the property market, and the challenges many face in doing so, will undoubtedly be a hot topic in the upcoming budget on 11 March. Please see below some items which may possibly feature in Rishi Sunak’s first budget as Chancellor of the Exchequer.
We would strongly recommend that you get in touch to discuss your property aspirations with one of our Mortgage Advisers, where we can, at the very least, put you on the right track to becoming a homeowner. If you are not in a position to buy right now, we will be honest and advise you on the steps you need to take to get there. Our service is free, and you are never obliged to do business with us. It’s worth taking advantage of our experience and knowledge.
Budget 2020
With Rishi Sunak due to deliver his first Budget on the 11 March, there are several property-related topics to look out for.
Key workers: The Queen’s Speech advised us that a new policy would offer 30% discount to key workers and first-time buyers purchasing properties within their local area.
First Homes Scheme: We expect more insight into the Government’s proposed First Homes scheme, which is designed to help people buy new homes within their local area for 30% less than the market price. With the average new build property costing £314,000, first-time buyers using the scheme could save an average of £94,000. In addition, ‘the savings would be “locked in”, meaning future buyers would also benefit from lower prices.’5
Stamp duty: Stamp duty reforms are expected, following Boris Johnson’s manifesto pledges in the run up to the election. He proposed increasing the stamp duty threshold to £500,000 and reducing the top rate from 12% to 7%. Furthermore, the tax would be paid by the seller, rather than the buyer, which could have a strong impact on the buying and selling process as we know it today.
Should this happen, it will likely be a welcomed change for landlords, who currently pay a 3% surcharge on all investment properties.
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1https://www.whatmortgage.co.uk/news/spring-buyer-boom-set-drive-asking-prices-record-levels/?utm_source=e-shot&utm_medium=email&utm_campaign=WM-1096(Edi)-Weekly2https://www.gov.uk/government/collections/uk-house-price-index-reports3https://www.knightfrank.co.uk/research/article/2019-12-13-what-does-the-uk-general-election-mean-for-property4https://www.ukfinance.org.uk/sites/default/files/uploads/Data%20(XLS%20and%20PDF)/UKF-Mortgage-Trends-Update-17-December-2019.pdf5https://www.telegraph.co.uk/business/0/budget-2020-date-next/
