house prices continue rising as demand outstrips supply
As summer comes to an end, the children go back to school and many workers return to the office, one thing that hasn’t changed is the upwards trajectory of house prices. Despite the stamp duty holiday tapering from the end of June and ending on 30 September, indications are that while house-price growth is finally slowing, the national average price continues to rise.
With a reduced supply of housing stock on the market, this is no real surprise. Where demand outweighs supply, buyers know that if they are serious about moving, it will cost them to do so. The pandemic has created a ‘race for space’, both inside and out, and with many workers not having to be in the office quite as much as before, they are able to go further afield. That’s why prices in areas outside London are rising at such a pace, while those in the capital have lagged. Annual house price inflation in the Northeast is 8 per cent, for example, while Greater London registered just a 1.3 per cent annual increase in prices in August, according to Halifax.
mind the gap
At the same time, the unprecedented percentage growth seen over the past 12 months is simply not sustainable, nor is it healthy for the market. The gap between incomes and house prices grows all the time, even more so now with the government increasing National Insurance to help fund the NHS backlog and social care. For first-time buyers and second steppers trying to purchase a bigger home for a growing family, it can be nightmarishly difficult.
However, while money remains cheap and mortgage rates are at rock-bottom, buyers can afford to borrow more. Low mortgage rates mean monthly repayments are cheaper than they would otherwise have been, so are more affordable. That is until rates start rising again, which they will at some point, and borrowers need to remember that, even though it is highly unlikely to happen anytime soon.
stamp duty reform
The stamp duty holiday proved to be a successful trigger to get the market firing again after it closed its doors during the first lockdown last year. It sends a powerful message to the government as to how and where it can encourage future activity, with a positive knock-on impact across the economy which goes way beyond the housing sector. Reforming stamp duty is something we have demanded for some time, possibly reducing or removing completely the stamp duty paid by downsizers. This would encourage the ‘older’ generation to sell their bigger, family homes, freeing them up for buyers trying to scale the property ladder by removing the heavy tax on moving.
how we can help
With activity brisk in the housing market, those borrowers who need to move quickly with their investment purchases may find this is not the easiest of tasks with a standard buy-to-let mortgage. This is where bridging finance can help, significantly speeding up a transaction with loans typically agreed upon within hours.
At MT Finance, we can lend from £50,000 up to £10m at up to 70 per cent loan-to-value with terms from 1 to 24 months. Get in touch for more information on enquiries@mt-finance.com or 0203 051 2331.