House price growth picks up, with all eyes on the Budget
The recent flurry of house-price surveys suggest a welcome pick-up in confidence and activity and the latest report from the Halifax is no exception. The lender reported that house prices in February were 2.8 per cent higher than the same month a year earlier. Quarterly numbers were also up – 2.9 per cent higher in December to February than in the preceding three months (September to November). Halifax noted that buyer and seller activity is strong compared to recent years, with positive employment conditions and a competitive mortgage market continuing to support demand.
It is hugely encouraging to see both a positive quarter and year-on-year price rise. This is largely down to December’s convincing general election result, with positive vibes since coming out of Parliament and a feeling that this government will get Brexit done.
Pent-up demand means bidding is high, with sellers taking advantage, so buyers need to be quick off the mark if they want to proceed. However, there are buyers and sellers who are holding out to see what possible changes come in Wednesday’s Budget before they make a move. On the subject of the Budget, it would be a hugely positive move if the new Chancellor reduced stamp duty, ideally focusing on the higher end of the market. This would slowly impact on the rest of the market as the effect trickles down, encouraging homebuyers who are looking to upscale to get on and do so. In turn, they will put their own homes on the market, giving buyers further down the ladder more options when it comes to finding a property to purchase.
There is plenty of pent-up demand but lack of quality stock. By improving the availability of property for sale, the market will be reignited. This will have the knock-on effect of improving the economy as a whole with new homeowners going out and purchasing new kitchens, bathrooms, building materials etc.
Halifax also noted that there are a number of risks ahead, not least the potential impact of coronavirus, as we wait to see how that plays out. If foreign buyers are hit by currency and stock market fluctuations due to the virus, this would negatively impact their buying power, and could cause an issue with liquidity at the super prime end of the market.
There are potential problems on the horizon; for now, housing market sentiment is good and long may that continue.