Property transactions return to pre-Covid levels
The good news for the housing market is ongoing, with the latest transaction numbers from HMRC revealing that it continues to bounce back from national lockdown. An uptick in transactions across the market in September clearly illustrates the positive impact of the Chancellor’s stamp duty initiatives, as well as continued confidence demonstrated by homeowners and investors alike in the solidity of the market as a whole.
This is even more remarkable when you consider the continued bad news that comes out of Westminster with regard to further potential lockdowns and the economic outlook.
The fact that residential and non-residential transaction volumes are only slightly down compared to the same month last year is also hugely significant. Confidence and demand have held strong after months of the Covid-19 pandemic as people get on with the business of moving. Post-lockdown, people want more space both inside and out, with many feeling that they have put their lives on hold enough during the Brexit debacle. Now is the time to get on with that move.
Houses rather than flats
Figures out from the Land Registry and Office for National Statistics reinforce the HMRC transaction numbers. Part of the reason why this year’s numbers look so strong is that there were so many negatives impacting the market a year ago. We may not have heard of Covid then but there was more than enough to deal with given the Brexit debacle, along with the threat of a Jeremy Corbyn-led government becoming a reality.
Since then, we’ve had the added stimulus of the stamp duty holiday, plus lower interest rates and the Bank of England encouraging lenders to lend, which has pushed up prices and sales volumes.
However, there is a caveat to the above, and it is an interesting one. Prices and volumes are indeed strong when it comes to houses but not so for flats, especially new builds, where there has been a decline in both volume and prices. This confirms the trend created by lockdown with more people looking for increased space, gardens and local village environments, where they can work from home, shop locally and travel into London with good rail access.
All this is bound to have an impact on how new-build blocks are designed in future, with more green spaces included and possibly shops within those developments. There is a strong argument for fewer units and more outside space. The decline in popularity of new builds has also been affected by fewer foreign buyers purchasing or travelling into the UK, a trend which is set to continue in the short term at least.
Will the recovery continue?
The government will be expected to, and has already indicated that it will, support the market further with higher loan-to-values for first-time buyers trying to get onto the ladder. This is particularly welcome considering the lack of such products on the market at the moment and the importance of first-time buyers to the overall health of the market.
An extension to the stamp duty holiday will also be necessary to avoid the market falling off a cliff, and ensuring that those who suffer delays to their property purchase over the next few months don’t miss out on the exemption.
As long as there is not a sudden and sharp tightening of credit criteria, which would adversely impact liquidity, there has to be an ever increasing confidence in this market’s ability to ride this pandemic out without a significant adverse adjustment.
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