The Covid Effect: What Happened To The UK Property Market?
The UK’s property market is booming right now, with house sales surging during the Covid-19 pandemic. Many industries have suffered due to Covid-19, but the property market is an example of a sector that has had real success during the pandemic.
Below, we are going to discuss the key ways that Covid-19 has affected the UK property market in the past year and what might happen to the industry post-covid.
Highest property sales on record
A recent report by HMRC revealed that UK property sales hit their highest levels on record in March 2021. There were an estimated 117,860 residential sales in April 2021, showing a 179.5% increase from April 2020.
The property market was able to remain open and active in the UK throughout the pandemic. Estate agents have been conducting in-person house viewings (while complying with social distancing guidelines) and buyers can move home, even while Covid-19 measures are still in place.
The Stamp Duty holiday is one reason why so many people have chosen to buy property and relocate during the pandemic. Under the scheme, buyers do not have to pay Stamp Duty tax on any property valued at £500,000 or under until June 2021. This has the potential to save homeowners up to £15,000 in tax if they are buying a second home. We will discuss the Stamp Duty holiday and other government property incentives below.
Increase in average house prices
According to The Fry Group: “House prices have risen on average by 8.6% in the last year and the average selling price hit a record high of £258,000.” With Reuters summarising that transactions completed in March we’re a straggering 10.2% higher than the previous year.
Surge in rural relocation
Several months of working from home and homeschooling have led many people to look for more living space and greenery. People living in busy towns and cities have also been prompted to look for properties in rural locations that offer more green areas. A recent survey revealed that 55% of young Londoners want to swap city life for the countryside.
Covid-19 has sparked rural relocation and many adults and families living in cities are considering moving to rural locations. Property estate agents have reported a significant increase in interest in rural locations among home buyers since the start of the pandemic.
Government initiatives
The UK government introduced initiatives to support the property market and maintain momentum during the pandemic. In July 2020, Chancellor Rishi Sunak announced a temporary Stamp Duty holiday that meant that there would be no Stamp Duty fees on all properties valued at £500,000 or under until 31 March 2021.
This scheme was extended by three months to the end of June 2021 to help continue to grow the UK’s property market. The allowance will then drop to £250,000 until the end of September 2021, before returning to the usual Stamp Duty rate of £125,000.
The Chancellor has also announced that low-deposit mortgages will be introduced to maintain interest and help first-time buyers get on the property ladder. The government’s new mortgage guarantee scheme means that rates are beginning to fall and housebuyers can find a 90% or 95% mortgage deal more easily.
These incentives have clearly played a role in the growth of the UK’s property market. The impact of the pandemic and government incentives has given homeowners the opportunity to relocate, perhaps earlier than planned and this has lead to a surge in sales and property prices. Incentives like the Stamp Duty holiday and mortgages deals have helped first-time buyers afford a deposit and get on the property ladder during the pandemic.
Summary
Covid-19 has had a devastating impact on industries all across the UK and many businesses have sustained huge financial losses in the past 12 months. The UK property market is an example of an industry that has grown and flourished during the pandemic.
Property sales are at their highest on record and house prices have soared in the past 12 months. The pandemic has caused people to rethink their living arrangements and many homeowners are considering relocating to rural areas to gain more space and green areas.