Property Prices are Still Rising
At the start of last year, no one could have anticipated that we would live through a global pandemic that would turn our world and way of life upside down. What’s more, no one could have predicted the effect that the pandemic has had on house prices.
When the property market effectively shut down, there were reports of people pulling out of their property purchase fearing that house prices would crash. However, since the market re-opened last June, house prices have continued to rise with a buoyant market, record selling times and asking prices at a record high in all countries and regions across the UK.
According to Rightmove, for the third month in a row, the national average house price has risen to a record high of £336,073. See the latest House Price Index.
The demand for property isn’t limited to those purchasing – the rental market has been equally busy as people have reassessed where and how they want to live.
If you’re thinking of investing in property the market can be overwhelming given the competitive nature of purchasing property at present, especially when you are trying to maximise your profits. But it helps to understand why the market is so busy and why demand doesn’t look to ease up any time soon.
According to Moneyfacts, buy-to-let product choice has steadily increased and the average two- and five-year fixed rates have fallen. In fact, the average two-year fixed rate is lower now than it was in 2019. In addition, the largest number of products available has been seen at the start of July 2021 with 971 more products on the market now compared to the same time last year.
Landlords with 40% equity or deposit would be able to secure a competitive deal as the average two and five-year fixed rates in this bracket remained 0.03% lower year-on-year.
For those buying a new home, low interest rates have helped more people to purchase their first home or move up the property ladder. The Mortgage Guarantee Scheme was launched in March this year, offering buyers access to 95% mortgage loans in a bid to tackle the widespread withdrawal of high loan-to-value mortgages. Although not all lenders have signed up to the scheme, it has prompted a most lenders to offer 90% or 95% mortgages independently of this scheme.
A record number of movers
Demand for homes is outweighing supply. According to Rightmove, more than 180,000 new properties were listed on the portal at the start of June 2021, but this is not meeting the current demand. Homes are selling and renting faster than ever before and for those buying a new home, a record number are being sold over or at asking price.
Most in demand are large, detached homes with gardens or city apartments with access to outside space by way of a balcony or terrace as many people are working remotely and commuting less. This trend looks set to continue.
The sale of large family homes at the top end of the market are contributing to the biggest rise in asking prices this time of the year in six years.
There has been a marked increase in people moving from more expensive cities and towns to more rural areas. The result is that prices in towns and villages in the most in-demand regions have risen at an incredible rate.
The value of homes have risen by 8% in Scotland in the last year and it is the UK’s fastest selling region at just 24 days – the next fastest region is the south west at 38 days.
The LBTT break that ended in March along with low record interest rates have helped many people in being able to afford higher prices. The temporary reduction of LBTT offered buyers a potential saving of thousands and this contributed to the spike.
What is the outlook?
According to Rightmove’s early indication of prices and levels of buyer demand, the number of people sending enquiries to estate agents is still up by almost 40% compared to the same time last year despite the end of the stamp duty (LBTT) holiday.
However, there are early signs of the market cooling as the number of sales agreed is still growing, but available properties are in short supply.
High prices paired with the lack of supply is starting to impact buyers’ ability or inclination to move. The super charged activity cannot last forever but many commentators including those at Rightmove believe that the market will remain vigorous for the remainder of the year.
If you are renting out or selling a property, you can be confident that you will attract a large number of enquiries, and this looks set to continue for the rest of the year.