Who would have guessed at the start of the Corona Virus pandemic back in early 2020 that the Housing Market would boil and bubble away, with above inflation house price increases and the return of the maligned and little understood gazumping.
That’s exactly what has happened in many parts of the UK – in particular Todmorden and Hebden Bridge. Which magazine ran an article last month quoting a 10% increase in house prices year on year. They spoke of a booming market with buyers spurred on by the temporary Stamp Duty cuts, hoping to save as much as £15,000 if they can meet the deadline.
The article quoted Land Registry data – suggesting 190,980 sales went through in March, almost double the number recorded a year earlier and 32% more than in February. But they didn’t highlight the fact that sales in March 2020 were down and sales in April 2020 crashed! So a lot of this boom, has been recovery. (See graph)
As I have mentioned in earlier blogs, I still do not believe anyone has bought a house simply because of the stamp duty holiday. I believe this give-away has helped fuel the house price increases but not the volume of transactions. It may, however, have brought forward people’s plans to buy. Especially considering holidays have been curtailed and even weddings have been cut back or postponed. Apart from a couple of months (principally Match & April) last year, the housing market was in full swing when many other high cost events and luxuries had to go on ice. Not surprising then that people would bring their plans forward to take advantage of this tax holiday.
Also not surprising is that people would reappraise their home/work life balance and look to move up if they could afford to do so, so as to allow for a home office or work space. The cities suffered badly in lockdown, many of the benefits and advantages of city life were hard to appreciate when everything was closed. Therefore, commuter towns and villages, such as can be found in the Calder Valley, seemed even more attractive to would be home buyers.
The factors above have helped create a real buzz in the market but have occurred at the same time as a slump in supply. Whilst people may be flocking to our towns and villages, they are not leaving in the anything like the same numbers. This supply shortage, has inevitably lead to buyers having to fight and out-bid each other to secure a purchase. Land Registry data shows an average price of £256,405 for March 2021 in the UK, a rise of 10.2% year-on-year whilst Nationwide’s index (based on mortgage lending) reported a 7.1% annual rise in prices in April and Halifax (also based on lending) reported an 8.2% annual increase.
I think these reasons are more pertinent to the current property boom and not simply a case of stamp duty savings. If I am right, it means we will not see the market slump once the June deadline has passed. Time will tell!