The real estate market in the UK is soaring and, with it, so are property prices. According to many of the reliable house price indices, the end of May 2021 showed a growth of 1.8% in house prices. This price rise will likely continue in June 2021. The rate may differ in various areas, but estate agents all over the country, including the Buckingham letting agents, have been very active in handling the increase in property requirements.
SDLT holiday extension: With the second phase of the holiday ending on 30 June 2021 for properties up to GBP 500,000, there is still a rush for buyers to meet the deadline. Though the tapering process will continue till the end of September 2021, that will apply only to properties up to GBT 250,000. This has caused the applications for properties to rise and has increased house prices as well.
Competitive mortgages: Last year, in early pandemic times, many lenders withdrew suitable mortgage offers as they were wary of clients not meeting their payment commitments. Higher deposits were then required.
However, with the new budget offering the 95% guarantee mortgage scheme, other lenders have also come forward with competitive offers for 90% and 95% mortgages. This has led to more people, especially first time buyers, taking advantage of the offers, which, in turn, has led to a spike in property prices.
Property preference: The pandemic caused many people to reassess their housing requirements, especially with many working online from home. Priorities seemed to surface for more spacious accommodation to include a working area and space for outdoor relaxation. A preference was shown for detached houses.
This increased the demand for larger properties away from city centres, towards the suburbs, rural and coastal areas. Property prices rose in such areas. With the likelihood of working from home continuing for some time, at least partially, and people becoming accustomed to living in comfortable, environmentally-friendly areas, the demand for such properties continues – and so do the high prices.
Credit affordability: The Covid vaccination programme and the easing of lockdowns has given hope for a return to near normal. With offices reopening and shops, restaurants, pubs, and entertainment venues, the employment potential may rise.
Everything is rather uncertain at the moment, but if the economy improves and employment increases, the credit affordability of prospective buyers will increase as well. To avail of low mortgage rate schemes, certain credit targets have to be met, and if the incomes rise, so will the credit rating.
Due to lockdowns with the closure of the non-essential retail and service industry, some people have even been able to save a substantial amount of money which, in turn, will help with affordability.
Lack of supply: The demand for property has always exceeded the supply. This demand has now increased with a lack of supply, especially as more people are looking for larger living spaces with more open areas.
At the same time, with city centres returning to life and educational institutions reopening, accommodation requirements in those areas may also see a rise. As this trend of demand exceeding supply persists, hikes in property prices will also continue.
Summer: The summer months are feasible for moving house, and with the usual summer holidays abroad likely to decrease, more time is available for such house moves. Hence, the purchase of property in June and the coming months is expected to continue. With it, so will the rise in house prices.
Foreign investment: The UK has always drawn many foreign investors to the real estate market. This is likely to continue, especially with the easing down of lockdowns and resumption of international travel. Despite virtual viewings being very popular with improved technology, physical viewings have always been preferred, with onsite evaluations. The result of this continuous foreign investment in property will lead to an increase in house prices.
Conclusion: The real estate market looks like being even more resilient at present. Even though house prices have risen astronomically, the demand for property is also increasing. Many people have confirmed that, even after the SDLT holiday ends, they will still be interested in buying houses in preferred areas and according to the specifications they desire.
The “race for space” will continue. It is a good time for prospective buyers and sellers. A drop in the price in a particular area can be good for a buyer, especially in regions that are not so popular now but may predict a better future.
For professional investors, the increase in property value in an area can be a good time for selling and reinvesting. By carefully researching the various factors, especially with the invaluable advice of an experienced estate agent, a good property transaction can be accomplished even with the overall growth in house prices.
Read also: Are Supplements the Right Choice?