Covid-19 ‘has blown the lid off the housing market’

Original source: https://propertyindustryeye.com/covid-19-has-blown-the-lid-off-the-housing-market/

Author: MARC DA SILVA

The number of residential property transactions in the UK increased by 9.8% between September and October to hit 105,630, up 8.1% year-on-year, the latest figures from HMRC reveal.

On a non-seasonally adjusted basis, the number of residential transactions is 13.7% higher than October 2019 and 23.7% higher than September.

Andrew Southern, chairman of property developer Southern Grove, said: “Covid-19 has blown the lid off the housing market. After years in the doldrums, coronavirus has unexpectedly provided the rude awakening the market needed to launch its great escape. The pandemic and a raft of measures to support the economy have delivered record house prices and, finally, a head-turning recovery in sales volumes.

“There haven’t been more transactions than this in a single month since March 2016, and even that was a very unusual spike created by tax changes for landlords.

“This pandemic milestone is very much against the run of play, and mirrors the outperformance of the housing market compared with other sectors. It’s also the first time since the coronavirus erupted that residential sales volumes have grown on an annual basis, and that’s fantastic news.

“It reinforces the strength of the housing market, which gives developers the confidence to keep growing and building. It also provides a confidence boost to prospective homeowners who, in the face of an onslaught of negative news and the prospect that the end of the stamp duty holiday in March could soften prices, want to feel they aren’t jumping in with both feet just at the wrong moment.

“The reality is that the UK market has always shown strength in value over the medium term. The optimistic amongst us will be hoping this healthy upward trend will continue to the long forgotten highs that were considered perfectly normal prior to the Global Financial Crisis.”

There is no doubt that the reopening of the property market and the stamp duty holiday caused a huge influx on buyer demand, according to the director of Benham and Reeves, Marc von Grundherr.

He commented: “It’s only really now that this demand is starting to translate into a full return to health where actual transactions are concerned.

“This is, of course, due to the lagged nature of the property selling process and so this positive health report is really just the start of what should be a steep increase in transaction volumes over the coming months.”

Nick Leeming, chairman of Jackson-Stops, believes that it is hugely encouraging to see residential transactions reach a seven-month high.

He said: “Transactions were bolstered  soon after the stamp duty holiday was announced in the Summer, but now they are soaring.

“Not only is this good news for buyers and sellers, but the knock-on impact on businesses within the home-moving process, that vitally needed income during this time, is very significant, too.

“The policy holiday, along with a renewed desire to move due to lifestyle changes post-lockdown, has seen hundreds of buyers and sellers rush to the market, keen to beat the March deadline. But we know this can only last so long.

“The government’s SDLT holiday has been critical in keeping the economy moving throughout some of the toughest conditions this country has ever experienced, making it possible for people to move who otherwise wouldn’t be able to afford to at this time.

“Punitive policies introduced now or in the New Year will only reverse the momentum the market has mounted over the past couple of months. With the stamp duty holiday coming to an end, and an additional 2% surcharge for non-UK buyers expected to be introduced in April, measures must be put in place to prevent transactions falling off a cliff edge.”

The managing director of Enness Global Mortgages, Hugh Wade-Jones, acknowledges that the property market is continuing to build momentum at a rapid pace, but feels that some lenders are stifling market activity by reducing their range of products for first-time buyers, in particular, over the last few months,

He remarked: “There has been such an overwhelming demand in recent months that the industry has struggled to keep pace and as a result, backlogs have formed with many left in limbo as they wait for their sale to complete.

“However, as the industry works to shift this backlog it does mean a consistently high level of transactions will be seen over the coming months.

“It’s taken just six months for the market to recover from pandemic induced paralysis and we expect to see transactions continue to climb for many months to come.”

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