A somewhat overheated property market shows a degree of volatility, yet further price rises are predicted. Is your own home one of those properties most likely to be in demand? And, for some, the extended Stamp Duty holiday seems to have presented an opportunity to get rich quick.
These are some of the main news headlines to have caught our eye so, let’s take a closer look.
Property transactions dropped more than a third in a month
The number of property transactions took a dive between March and April, with a 35.7% reduction in the number of completed sales, reported Property Wire this week.
Yet even this significant drop cannot disguise the fact that April still saw the biggest volume of sales of homes in 14 years and the figures are a whopping 180% higher than they were at this time last year.
In the year to March 2021, the average house price in the UK has risen by 10.2% according to figures published by the Office for National Statistics (ONS).
With 95% loan to value (LTV) mortgages once again on offer in the marketplace, the extension of cut-rate Stamp Duty taxes tapering until the end of September, and the continued relaxation of lockdown restrictions, these are all likely to continue to fuel a rampant demand that outstrips supply – as we noted in our news roundup on the 12th of May.
Nationwide predicts UK house prices will continue to rise
Also commenting on the ONS figures showing a 10.2% annual increase in house prices, a story in the Guardian newspaper on the 21st of May cited analysis by the Nationwide building society suggesting that prices would continue to rise.
The analysts pointed to the surprising strength of the housing market throughout the pandemic, the release of enormous pent-up demand once restrictions were eased, and the continuing encouragement given by the Stamp Duty holiday.
Even when those tax concessions are removed, however, the building society predicts that prices will continue to rise – as an inevitable result of the mismatch between high demand and a relative shortage of supply.
The losers in a market of continually rising house prices are almost certain to be first-time buyers, noted the commentators.
Nationwide’s figures also revealed the significant volume of housing transactions with 25% of homeowners currently looking to buy or having completed the purchase of a new home compared with the usual 5% of homeowners completing transactions at any one time.
How in-demand is your home?
Against this background of practically unprecedented demand, on the 20th of May online listings website Zoopla published a guide to the type of homes most in-demand – by housing type, location, and motivation:
One- and two-bedroom flats
- the demand for one- and two-bedroom flats is being driven both by first-time buyers and older folk looking to downsize, according to Zoopla;
- the most sought-after locations for homes were in Stockport, in the northwest of England, where demand grew by 164%, to an average price of £154,000;
- this was followed by Pembrokeshire in South Wales, where demand rose by 122%, to an average price of £119,000; and
- in third place was Havant, in Hampshire, which saw a 114% increase in demand and a current average price of £158,000;
Two- and three-bedroom homes
- growth in demand has generally been strongest where prices started below the regional average – and coastal locations have been especially popular;
- thus Scarborough, in North Yorkshire tops the bill on this score, followed by Portland and Weymouth on the south’s Jurassic Coast, Forest Heath in Suffolk, and Falkirk in Scotland;
Four- and five-bedroom homes
- larger homes have been in especially high demand, thanks to the extra space wanted by many homeowners as they emerge from the cramped conditions of lockdown;
- in this sector of the market, Cambridge leads the way with a significant 182% increase in demand, followed by Hastings (92%), and Horsham, in Surrey (79%).
The upsurge in market activity is motivated by several factors, including the reopening of schools in March, the search for more spacious homes, the extended Stamp Duty tax holiday, and availability of 95% mortgages, according to Zoopla.
Some solicitors “charge exorbitant fees to hit SDLT deadline”
An article in Estate Agent Today on the 24th of May claimed that some solicitors are cashing in on the impending termination of the Stamp Duty holiday and charging “exorbitant” fees to achieve completion before the deadline at the end of June.
As we reported in our news roundup on the 24th of February, the scheduled ending of the Stamp Duty holiday at the end of March led to a last-minute surge to complete before that deadline – and the enthusiasm was accompanied by warnings not to rush the legal paperwork.
At the beginning of March, the Chancellor extended the tax holiday by a further three months to the end of June (and at a reduced rate until the end of September). This has prompted a further surge in homebuying interest – which Estate Agent Today suggests has fuelled the unreasonable fees charged by some solicitors’ keen to beat the new deadline.