Jaz Kaur (Left) & Narinder Singh Nijjar (Right) – Directors & Co-Founders of The Lettings & Sales Business
In the wake of the property market starting to reopen, the number of people looking to buy a home rebounded in June, as did the number of new properties being listed for sale, according to the latest monthly snapshot from the Royal Institution of Chartered Surveyors (RICS).
Socially-distanced property viewings restarted in England on 13th May and then on the 8th July, the housing market was given a fantastic shot in the arm by The Chancellor Rishi Sunak, and his announcement of the stamp duty holiday that will be in place till 31st March 2021. So all seems rosy and vibrant in the property market… or does it??…
There are challenges that will be faced by buyers and sellers alike in the coming months which will go a long way to determining whether this boom in the market will be short lived or whether there will be enough resilience shown by lenders and buyers to be able to sustain this current momentum.
“We have a situation right now where people are willing to make higher bids for the perfect
home due to stamp duty holiday savings. We’ve noticed an increase in house prices of up to
2/3% because of this. Brexit & Covid-19 have started to influence buyer behaviour and
people have decided that putting the perfect roof over their head is more important than
the price they pay for it or what it may be worth in the future”, commented Jaz.
The current demand that is pushing up these prices is partly driven by sales previously being put off – partly due to the fear of Brexit – while others are being brought forward due to people being unhappy during lockdown or the stamp duty savings.
We foresee, the market will remain busy until the end of November, but then people may hold off looking until January. Sales are likely to then pick up to the end of March and although some pre-Christmas bargains may be available, prices will probably remain relatively stable during this time. Consumer confidence will also be tested by lenders and their appetite for borrowing…
“When it comes to planning long term, buyers are not really too concerned about how the market may behave. The uncertainty that the pandemic has produced is again being reflected in the buying behaviour of customers. Of course, lenders are taking very cautious approach to this as well- we have seen many lenders re-visiting mortgage applications for applicants who are currently furloughed and as a result, some products are no longer being offered to the said clients. I can’t say for sure but my gut feeling tells me there’ll be a massive levelling out of the housing market”, opined Narinder.
From the lettings point of view, if those wanting to increase their portfolio hold on for another six months they’ll find there’ll be more coming on the market at a truer price, which means the yields will increase by a couple of percent. In the new-build market, builders and developers have greatly benefitted from the current Help to Buy (HTB) scheme in which buyers only need a 5% deposit and the government provides 20% of the house value. The new-build market has come back extremely strongly since lockdown.
However, there are clearly some uncertainties ahead in terms of the economy and resultant consumer confidence as a result of the impact of coronavirus and Brexit. The replacement Help to Buy scheme has been received very warmly, as the existing scheme has played a major part in the doubling in supply we have seen in recent years. It remains to be seen what impact the new scheme’s rules, in particular the regional price caps, will have on take up.
We’re currently assisting builders and developers in order to ensure that we as the consultants and selling agents are ready to face any challenges the new HTB scheme will pose. We’re already seeing more two and three bed houses at values of around £300k becoming the norm on developments that we are marketing as this means that first time buyers will not only qualify for HTB but will also not have to pay any stamp duty on their
Taking part in a monthly conference call with the Bank of England (BoE), we’re able to take a proactive approach in consulting our developers. BoE is currently exploring negative interest rates which could be a very unprecedented development for lenders…. One of the major hurdles for this will be the readiness of software systems being able to support negative interest rates.
Buyers and sellers looking for their next move and builders, developers who are already
building or in the process of building new homes can call us on 0300 124 5656 for guidance
or an informal chat on the best course of action for their situation at no obligation – we are always willing to help wherever we can and help make a difference