The first lockdown halted all activities within the UK property market. As a result, those who were about to buy or sell had no choice but to postpone their transactions.
The first Covid-19 lockdown led to speculations of falling house prices, but as soon as the lockdown was lifted, prices quickly began to rise.
Not only those who previously were about to buy or sell picked up where they had left off, but many new buyers and seller also began engaging within the market.
Furthermore, the government’s announcement about a temporary stamp duty holiday in July 2020 meant many also rushed to find a property to buy before its end in April 2021.
The move was made to boost the economy and the property market, as well as to help those who have been affected financially by the pandemic.
The property market is in a strange place right now, and the question is if you buy now what happens if or when the housing prices drop?
The Changes in the UK House Prices
The UK property market has always been unpredictable but in recent months, the UK House Price Index has measured an increase of 4.7% from September 2019 to September 2020.
The average price sale was increased by 1.7% between August and September 2020 alone.
According to HMRC, around 98,000 properties were sold in September that is up 21% on August figures.
The recent Rightmove House Price Index for October also stated that house prices are up 5.5% higher than last year.
The lockdown along with the stamp duty holiday as well as the government’s help to buy schemes have all worked hand in hand to make the changes that we are seeing right now in the UK house prices.
How the Stamp Duty Holiday Has Affected the UK Property Market
The range of cuts offered by the stamp duty holiday differs in each country, but in England with the threshold increased to £500,000, buyers could potentially save up to £15000 in tax.
In Scotland, the Land and building transaction tax (LBTT) is the Scottish equivalent of the stamp duty and the new threshold is now 250k.
Although the property market is booming, many are wondering if this will continue after the stamp duty holiday is cut along with the furlough scheme.
With Brexit around the corner, there are many elements that will be reshaping the future of the UK property market too.
The table below covers the new tax rates under the stamp duty holiday in each country.
How the Lockdown Has Impacted the UK Property Market
Another huge factor that has impacted the rise in the UK house prices is that when we were forced to stay indoors with no idea when things would change, many of us began to rethink our spaces.
Those who were left to work from home and to homeschool their children know more than others how important their surroundings are for their sanity.
People who lacked space in their home under the new on and off lockdown measures had no room to breathe. The importance of having access to an outdoor area also became more clear than ever before.
As a result, people are now looking for an adequate amount of living space as well as an extra area to use as an office.
With all the above factors in mind, it is no wonder that people are desperately engaging within the UK property market and looking to make a move as quickly as possible.
Help To Buy Schemes
People have been taking advantage of the many help to buy schemes that have been offered by the government to help the first time buyers to purchase a home.
These schemes have also impacted the demand for sales and played an important role in the increase in UK house prices.
England, Scotland, Wales and Northern Ireland all have different help to buy plans that you can access.
Although due to high uptake in recent weeks, some schemes have been paused for now and will reopen later in 2021.
Can the Stamp Duty Holiday Cut Affect the UK House Prices?
Coronavirus has impacted us in more ways than one and if we have learned anything it is that we will never know what the future holds.
These are very uncertain times and we have quickly understood that the only way to continue is to take it day by day.
The biggest question is whether the increase in UK house prices can be maintained or the new year will see the prices fall in the UK property market.
Is it a risk to purchase a property now by paying the premium value when there is a chance the prices fall after the stamp duty holiday has been cut?
Will the End of the Furlough Scheme Affect the UK Property Market?
There is a significant chance that when the furlough scheme is cut some changes might also apply to the UK Property market.
The furlough scheme has meant that many of us managed to continue to survive under the lockdown measures that were put into place and we were able to later restart our business.
When the furlough is cut, there is no guarantee that those who were furloughed will have their jobs to go back to or if the jobs will exist at all.
The possibility of people losing their jobs will result in many no longer being able to afford their mortgages.
Banks were also originally happy to lend to those on the furlough by considering the 80% of their income.
What Does the Second Lockdown Mean For the Property Market?
If you are looking to buy right now, then you would be glad to know that business is taking place as usual despite the second lockdown measures that have been recently put into place.
We know from our property clients that they are allowed to continue under all Tiers and buyers should use virtual viewings for the moment.
Under the government’s guidelines, you should only view the homes in-person once you are ready to make an offer.
When it comes to in-person viewings all the social distancing measures need to be followed by all parties involved.
For now, the UK property is on the rise due to the stamp duty holiday and the many help to buy schemes.
Many individuals within the hospitality sector and e-commerce have been impacted by Coronavirus, so when the government’s support schemes begin to change and cuts are made, the overall economy will most likely suffer.
Although the economic impact of Coronavirus is still unknown, one thing that’s clear is that it is a risk factor for the UK property market.
But, as of right now it is impossible to predict with certainty what the future has in store for the property market.
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