House prices have grown at their highest annual rate since 2007, driven by the surge in buyers taking advantage of the stamp duty holiday.

 

House hunters seek space and access to nature

UK prices soared by 10.2% annually in March which meant buyers were forking out, on average, £256,000 for a property during the month, the House Price Index from the Office for National Statistics has revealed

This was £24,000 higher than the average house price in March 2020 and highlights the extent to which both the pandemic and stamp duty holiday have impacted the property market.

Indeed, estate agents revealed how many buyers were looking to move to homes in commuter belts or further out of cities as the pandemic altered the way they worked.

Nick Leeming, chairman of estate agent Jackson-Stops, said its branches in ‘quintessentially English’ countryside towns such Chichester, Taunton and Chipping Camden continued to see the highest number of new applications, alongside London’s prime commuter-belt towns, including Sevenoaks, Dorking and Cranbrook.

This was because people wanted more space and access to nature, while committing to either longer term home working or a hybrid working model.

He added: “The number of new applicants that registered with our branches in March was on par with the number that signed up when the market reopened last June.

“Given the strength of demand, and the fact this is linked to fundamental shifts in people’s lifestyle priorities, we don’t see the market cooling in the near future.”

Regional breakdown

Wales experienced the highest increase in prices with growth of 11% which took the average price up to £185,000.

In England prices increased by 10.2% to reach an average of £275,000 and in Scotland a 10.6% rise meant the average price tag escalated to £167,000. Northern Ireland’s 6% rise in prices meant the average value was £149,000.

London, once again, experienced the lowest annual growth for the fourth consecutive month – prices increased by 3.7% in the capital, according to the data.

The North East and Yorkshire and Humber experienced the biggest growth – with prices soaring by as much as 14% in the North East.

Conveyancers ‘overwhelmed’

But many believe the current buoyancy will not last and have predicted a correction is on the way later in the year.

Lloyd Davies, managing director of legal practice, Convey Law, said the property market could ‘fall off a cliff soon’ when the ‘rush to complete’ before the stamp duty holiday died down.

And he revealed how solicitors dealing with property transactions had seen a rise of around 30% in volumes, triggered by the Stamp Duty holiday. This had impacted the speed of the conveyancing process and put huge pressure on an already overwhelmed property industry.

He warned: “Currently, buyers are rushing to complete before the end of the Stamp Duty holiday in June to potentially save thousands of pounds.

“The government has already acted to taper some of the savings until September but that will not be enough for many purchasers.

“I believe we will see aborted transactions and disappointed house buyers this summer and autumn unless the government looks at a much longer form of SDLT tapering.”

First-time buyers

There were also concerns the current house price inflation was worsening affordability problems for first-time buyers.

Kevin Roberts, director, Legal & General Mortgage Club said while the stamp duty holiday had helped existing homeowners and those purchasing high value properties, for those wanting to buy for the first time, the hot housing market could actually be making it more difficult to step onto the ladder.

“For these people, there is good news as there are schemes currently available which can help make it easier to buy, by reducing the deposit and affordability requirements to securing a home,” he added,

“Help to Buy and Shared Ownership are two great government-backed options. Mortgage lenders can also help and those wanting support with the mortgage affordability process may wish to speak with an adviser about how a family-assist mortgage could benefit them.

“Of course, along with these initiatives, there is also a critical need to boost housing supply in the UK. It is vital that we begin hitting our target of 300,000 new homes each year to ensure there are affordable but also high-quality and sustainable homes for generations to come.”

Article sourced from What Mortgage on 19^th  May 2021. Original full article can be viewed by clicking link below

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