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Summary
- The housing market has been one of the strongest performing UK sectors this year, after it reopened after the first lockdown in May
- Mortgage approvals in October reached a high value of 97,500
- The primary reason for the rise in demand has been the pandemic, in which people wanted to buy houses away from cities
- Government stamp duty holiday scheme was an added advantage
The demand for housing is still breaking records in the UK almost after five months since the stamp duty holiday scheme was announced. According to the official data published by the Bank of England, the number of mortgage approvals to purchased houses touched a 13-year high of 97,500.
This data shows the enthusiasm of the people to buy new properties before the tax holiday comes to an end on 31 March. In September it was 92,100, which was the highest since September 2007 and 10 times higher than the numbers, 9400, in May.
According to industry experts, the trend has not slowed down even after the Lockdown-II which was announced on October 31. They said that there are so many pending registrations that the officials may not complete the process by the due date. There is a buzz that people are already asking for an extension of the stamp duty holiday.
Current Trend
The number of mortgage approvals over the past six months has jumped by more than ten folds. Google trends data of Britain’s leading property websites -- Zoopla, Rightmove, and OnTheMarket – displayed a 30 per cent rise in the website traffic in November as compared to the same month in the previous year.
The demand for new houses is currently coming from areas away from metropolises like London. As per data provided by real estate agents Knight Frank LLP, the prices of country houses in West Midlands have risen by an average of 3.7 per cent, where Worcester is the most in demand. The prices of properties in North Surrey have increased by an average of 3.1 per cent, where Cobham, Ascot, Esher and Weybridge are leading the race.
According to the data provided by Knight Frank, for the properties tagged below £1 million, the prices have risen by 1.8 per cent. For properties priced above that, the prices shot up by 2.3 per cent. Further for homes between £3 and £4 million, prices increased by 2.9 per cent for the quarter ending September 30, as compared to the preceding quarter.
The trigger
Rishi Sunak, Chancellor of the Exchequer, raised the stamp duty threshold from £125,000 to £500,000 in England and Northern Ireland in July, which would run till the end of March next year. According to the provisions of the holiday scheme, buyers could save on stamp duty up to £15,000 on purchasing properties worth £500,000 and beyond. Since July 8 when the scheme was announced, the demand for houses has been on a sharp upward trend.
Pandemic and new trend
People in the UK have become highly skeptical about coming out of their houses and joining work since the pandemic broke out. The first lockdown prompted many companies to ask their staff to work from home and make suitable arrangements to deliver their responsibilities. People considered the work from home arrangement as an opportunity to move to suburbs, where the risk of catching an infection is relatively lower and the quality of life is superior.
Lockdown-II
While the ongoing lockdown hasn’t been able to dislodge the upward demand trend for the housing sector, it has definitely made it tougher for people to sell their homes. So, November saw a marginal softening in the prices of high-end properties.
Also Read: How House Building Stocks Are Performing Amid Rising Demand for Extending Stamp Duty Holiday?
