The state of the housing market at the end Of 2020

We are moving toward the end of a year that most of us will be glad to see the back of for obvious reasons. No doubt we're all looking forward to a better 2021. With the rollout of COVID-19 vaccines, we can, at last, see a glimmer of light at the end of the tunnel. So what does all this mean for the home buyer or seller? What is the current state of the property market in the UK?

Property markets in England, Scotland, Wales and Northern Island are enjoying a mini-boom with house prices steadily rising. According to the Halifax, the largest UK mortgage lender, the average price of a UK property in October was £250,457, a 7.5% increase on the previous year. The most reliable indicator of price is the Land Registry's UK House Price Index, which operates on a two-month time lag. It says the price of a property in the UK increased by 1.7% month-on-month and 4.7% year-on-year in September, to reach £244,513.

Experts believe the price increases are due to three principal factors:

•    Pent-up demand owing to inactivity during lockdowns
•    The government temporarily cutting stamp duty
•    People wanting to move to bigger properties especially if they come with a garden

Optimism

There is currently a lot of optimism around the UK housing market. Provisional data from HM Revenue and Customs (HMRC) shows that transaction numbers are rising significantly. During October, there were 105,630 property transactions, the highest single-month figure since 2016. This strong showing is set to continue into the new year. At the end of March, the stamp duty deadline will most likely be the cause of sustained buyer appetite as people make a dash to beat it.

Property website Zoopla reckons that the property sales pipeline is 50% bigger than this time last year and that 100,000 additional sales will be completed before the end of March.

The New Year and Beyond

Whether or not the optimism will last will depend on numerous factors. They include the effects of the nationwide economic downturn, whether unemployment levels go up and lead to more defaults in mortgage payments and the Brexit impact (deal or no deal).

December 2020