As a challenging year draws to a close, much of the property market is currently taking stock on the impact of the coronavirus so far and looking forward to what the future may hold.
It is a process which has generated its continuing share of news headlines.
House prices expected to drop in 2021
Building society Halifax predicts that average house prices are likely to fall – by 2% to 5% – as demand begins to slow down during 2021, according to a report by Mortgage Solutions on the 21st of December.
The surge seen in the final quarter of 2020 was fuelled by the release of pent-up demand during the initial periods of lockdown, the offer of a Stamp Duty holiday on home purchases, and a generally better than expected economic recovery.
According to some market analysts, these factors contributed to activity in the housing market that was some 40% up from one year to the next and the number of mortgage applications reaching a 10-year high.
As the New Year progresses, however, demand is likely to stabilise – and, with it, a fall in house prices – as the tax holiday on Stamp Duty comes to an end on the 31st of March, job furlough schemes expire, and unemployment begins to rise.
Wales raises stamp duty on second homes
A surprise move by the devolved government in Wales to change the rates of the local equivalent of Stamp Duty - land transaction tax – has caught everyone involved in house transactions seriously unawares, reported the BBC on the 23rd of December.
In an effort to raise funding for the development of new social housing, the Welsh government has introduced a land transaction tax surcharge of 4% for those buying second homes up to just £180,000 in value. On homes valued at £1.6 million or more, the surcharge rises to 16%. The BBC quotes solicitors in the Principality who complain that the revised rates were suddenly sprung on the industry at the last moment – resulting in immediate “chaos”.
Buyers of second homes in Wales are facing steep increases – seemingly effected overnight – in the cost of already planned transactions on the eve of completion.
The Welsh Government defended the increase in the land transaction tax surcharge by pointing to the estimated £13 million it expected to raise for investment in social housing.
An article in Property Wire on the 23rd of December argued that the move is likely to generate pressure on the government in London to similarly increase by a further 1% the existing 3% surcharge on Stamp Duty for the purchase of second homes and buy to let property.
Buying in London in 2021 – what’s hot?
In recent news round-ups, we have focused on the apparent exodus of homeowners and tenants from the capital to more tranquil – and cheaper – homes with gardens and space for home working in the countryside.
While house prices in the very centre of London have indeed suffered stagnation or decline as demand has waned, there still remain one or two lively hotspots – if you know where to look. An article in Homes & Property on the 21st of December invited you to do just that:
Barking and Dagenham
- even though it remains the cheapest of all London boroughs, house prices in Barking and Dagenham have continued to rise – coronavirus lockdowns notwithstanding – scoring an impressive 40% increase between 2015 and 2020;
- the average house price is currently £301,478 but some three-bedders are going for £800,000 and the Barking Riverside regeneration scheme will boost prices still further;
- average prices in this outer London borough have risen by 34% in the past five years to £370,920 – still eminently affordable compared to other London prices;
- Crossrail services to the popular Essex town of Romford in the borough are scheduled to start in 2022 and this should boost prices still further;
- this is one of the fastest-growing London boroughs in terms of population – especially among younger age groups;
- average house prices have grown by 32% since 2015 – to their current £373,415 – thanks at least in part to the development of Westfield, in and around Stratford, at the time of the 2012 London Olympics.
Covid Tier restrictions – what happens if you want to move home?
The Government’s Christmas present to large swathes of the country was the introduction of new, tougher Tier 4 Covid-19 restrictions. What happens if you want to move home in areas where those restrictions apply? An article posted by online listings agency Zoopla on the 23rd of December offered some answers.
Although there are many restrictions in practically every other sphere of life, even under Tier 4 conditions, the housing market remains open for business – whether you are buying, selling, letting, or renting, with estate agents and letting agencies also operating normally.
Advice from government spokesmen is that if you are looking to move home – and want to arrange or participate in viewings – you should follow your common sense and maintain the established rules on social distancing and the official guidelines already released about local restriction Tiers.