Gloomy predictions of a slowdown in the housing market towards the end of the year were completely blown out the water this week. Instead, the housing market enjoyed its busiest and best Christmas in more than a decade.
According to the Bank of England more than 100,000 households were given the go-head to go forth and buy property in November. At 104,969 mortgages, it was the largest number granted since summer 2007. It also exceeded predictions by more than 20,000.
Of course, the Stamp Duty Holiday had a huge impact, as did the desire for many city dwellers to move to a bigger house and greener surrounds, following lockdown and home working.
And as for 2021? The end of the Stamp Duty Holiday is, of course, expected to see a decline in the number of house purchases. And no wonder – from October to March this year, buyers could save up to £15,000 on a house purchase – an incentive for anyone who’d been planning to move house last year.
But more telling yet, will be the end of the furlough scheme in April. Thanks to the roll out of the vaccine, this is expected to be the last coronavirus ‘jobs rescue scheme.’ Unemployment figures are then expected to be rise and it’s this which is expected to have the biggest impact on the market all year.
The uncertainty of house prices
Meanwhile, one of the big lenders Nationwide, reported a 7.3% rise in house prices year-on-year in its final House Price Index of 2020.
But could 2021 be a different story in this respect? Well, not according to property portal Zoopla, which confidently predicts a 1% rise. Tell that to the Centre for Economics and Business Research (CEBR) though, which expects a 5% drop.
Brexit no longer a threat to property market
Even Brexit is no longer viewed by many as a big challenge to the property market after a last-minute deal was secured on Christmas Eve, making the economic future seem far less rocky.
Mortgage availability, together with low interest rates, is in the property market’s favour. Both of these are firmly in place at the moment, with more mortgage products appearing daily. There are even suggestions that the Bank of England base rate may go even lower, resulting in negative interest rate territory. The reason being that this would prompt more investment in the very much ailing UK economy. The Chancellor was facing around 2 trillion of a debt deficit at the last count.
New deal for first time buyers
Help to Buy has returned – but in a slightly different format. This time round first-time buyers will find a cap on New Build housing costs. Those properties eligible for the scheme will be capped at 1.5 times the average property price in the region.
Once again, the funding will be 20% of the cost of the property, increasing to 40% in London. But crucially, stringent quality controls have been promised, together with a guaranteed new home warranty prior to purchase. It should encourage more first-time buyers to invest. The fact remains though that the number of houses being built here in the UK remains woefully short of its target to meet a growing need.