7 May 2021 by Stacy Dawes

What does the UK housing market look like one year on?

What does the UK housing market look like one year on?

With the uncertainty in the UK property market when the COVID-19 outbreak began, the Government quickly implemented a number of measures to try and keep the housing market moving and to boost the economy. How successful have these measures been?

Recent figures show the demand for housing has increased and, coupled with the Stamp Duty Land Tax (SDLT) holiday extension, and low mortgage interest rates, it seems that demand is at an all-time high. According to HM Revenue & Customs, residential property transaction figures in March 2021 showed an increase of 102.3% when compared with the same time last year.

It could be a natural consequence of this – and so may not be a surprise – that the price of residential property has also increased, with the house price index showing a 2.1% increase in April 2021, and lenders such as Nationwide showing an average increase of 7.1% in house prices in the last year. The figures also show that the average house price in the UK has reached a record high of £238,831, up £15,916 over the last 12 months. With the demand for houses increasing, it is expected that prices will continue to rise in order to meet the growing demand.

The SDLT holiday has been a big contributing factor, encouraging many people to decide that now is the right time to buy. There has also been a ‘race for space’ as buyers’ value home office space and gardens, over access to city centres. Many buyers have boosted their savings during the various lockdowns too.

With the furlough scheme and the SDLT holiday both ending in the Autumn, it remains to be seen what will happen next. But, from the snapshot above, it seems the UK housing market is on a high and that the various Government initiatives have been successful.

How does all of this affect first time buyers?

Even with the SDLT holiday, and the potential to save during the lockdowns, the increase in house prices and the high demand for property are considered bad news for first time buyers.

However, if you are a first time buyer, you should remember the following:

  • SDLT: when the SDLT holiday ends, first time buyers may still be eligible for SDLT relief and first time buyers purchasing their home for £300,000 or less will still pay no SDLT.
  • Help to Buy (HTB) Scheme: the HTB scheme was introduced not only to help people afford property, and get onto the property ladder, but also to encourage house builders to provide a constant source of new homes.

Since 1 April 2021, the HTB scheme has only been available to first time buyers, meaning smaller homes, that would previously have been available to existing or previous homeowners as well, are now only available to first time buyers.

The new HTB scheme also includes regional price caps, instead of the £600,000 maximum value under the previous scheme. This is to try to ensure that the HTB scheme is more suited to first time buyers and that the properties available are both suitable and affordable.

However, the new HTB scheme will end on 31 March 2023 and it is not clear what the next Government initiative(s) might be to assist first time buyers.

  • High loan-to-value mortgage products: to further boost the market for ‘generation buy’, the Government has introduced a new 95% mortgage guarantee scheme. This will allow homebuyers, and particularly first time buyers, to get on the property ladder with as little as a 5% deposit.

In summary, there is good news and bad news, and the future is unpredictable. But one thing remains certain: if you are looking to buy a property, be sure to instruct expert professionals – brokers, surveyors and solicitors.

For further advice on buying a property, including if you are a first time buyer, please contact one of our residential real estate experts.

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