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How Will The UK Real Estate Market Respond As Restrictions Are Lifted Across The Country
Despite the cut back of tax benefits for purchasers from July 1st 2021, asking prices for British homes grew by 0.7 per cent between mid-June and early July compared to the month earlier, the largest increase for the time of year since 2007, according to the property website Rightmove.
Much like the UK, Australian states Queensland and Victoria saw an end to the Stamp Duty Holiday on June 30th, with NSW to ease exemptions on the 31st of July 2021, and between April and June, Australia saw an increase in dwelling values by 6.1 per cent across the country according to a report published by CoreLogic.
The report quoted an increase in dwelling values by 13.5 per cent in the 2020-2021 financial year, the highest annual growth rate since April 2004.
Moving attention back to the UK, a shortage of properties on the market exacerbated the price rise, pushing average asking prices to a new high for the fourth month in a row. Over the last six months, asking prices have risen by 6.7 percent.
Rightmove, who advertise 95 per cent of homes for sale in the UK, believes the market will be supported by the supply-demand imbalance. These findings were based on statistics gathered between June and July this year.
Since the coronavirus pandemic hit the UK, house prices in the United Kingdom have risen for several reasons including, people working from home needing larger homes, people seeking to capitalise on lower prices in the provinces where purchasers can get more for their money than in London, the introduction of government purchase tax reductions, and ease of access to the market for 1st-time buyers, all created a frenzy of activity.
The first £500,000 of any property purchase in England or Northern Ireland was exempt from stamp duty, an incentive lasting until the end of June. A £250,000-pound stamp duty holiday remains until the end of September.
According to figures based on completed sales, British house prices increased by 10 per cent in the year to May, matching their highest increase since 2007.
The housing boom aided in easing the UK economy's 10 per cent slump last year, but it has widened wealth disparities between property owners and those who do not own a home.
Separately, a study released on Monday found that consumer confidence in the UK returned to pre-pandemic levels in the April-June period, aided by the relaxation of several social-distancing restrictions and conditions returning to more ‘normal’ levels.
According to a recent Deloitte report, 79 per cent of people saved money during the pandemic. Over the next three months, 58 per cent of them planned to spend more on holidays, eating, going out, and clothing. The survey covering 3,000 people, took place between June 18 and June 21.
As COVID restrictions are lifted as of Monday 19th July in England, it will be interesting to see how the market responds. Will we continue to see a high level of interest in real estate, or will we see the market begin to slow down? In my personal opinion, I think as we continue to see the reopening of more borders, the British market will see a steadying of the market dynamics affecting homebuyers, however, I think we will also begin to see larger portions of investment from overseas, in turn continuing to drive supply down and resulting in the continuous growth in house prices. Whether this will be at the rates seen over the last 12 months, I think is unlikely and I believe it’s a matter of time before we see the full effects of leaving the pandemic behind.
However, there are some very positive signs for the UK market ahead!