Even through a Global pandemic, house prices in the UK have been steadily rising to a record high.
Nationwide building society said the average house price increased to £245,432 from £216,403 in June 2020.
Why asking prices are rising.
Factors that have increased the demand for properties.
The pandemic has caused people to re-assess what they want from their home.
- Large, detached homes with big outdoor spaces are in high demand from buyers with big budgets, with many now working remotely and commuting less.
- The pandemic has also made many people realise that the most important thing is for them to be close to family members and so a re-assessment of their geographical location has occurred.
- The return to very low interest rates has also helped more people to get on the property ladder, or to upsize to bigger and more expensive homes.
- First time buyers have been incentivised with a government-backed mortgage guarantee scheme offering buyers with small deposits access to 95% mortgage loans
- Stamp duty savings
Stamp duty factor
The market in recent months has continued to be stimulated by stamp duty holidays.
The temporary reduction of stamp duty tax rates in England and Northern Ireland has offered buyers a potential saving of up to £15,000, so many buyers are racing to move before the deadline.
Stamp duty tax savings and record low interest rates have helped many to afford higher prices, so they can find a new home that suits their changing needs.
Factors that have reduced the supply of properties.
- As the stamp duty tax break is now coming to an end, people, especially at the higher price end of the market, will be less inclined to put their properties on the market.
- With Furlough and other supports coming to an end, people are naturally thinking about their job security. People are less likely to put their property on the market under these circumstances.
The demand for homes is currently outstripping the number of properties available to buy. For this reason, homes are being sold at or above asking price.
However, we are uncertain whether this boom will be followed by a bust. If the economy fails and people are forced to sell and there maybe fewer people who are prepared to buy under these circumstances. If that situation is sustained prices may begin to fall again.