The slump of the British housing market looks to continue as lockdown is eased.
Housing Market During Lockdown
During April to June, property sales were at their lowest in record. This was due to the impact of coronavirus temporarily pausing the housing market chain. This so-called “frozen market” meant that house viewings were impossible and moves were cancelled or postponed. It was only mid-way through May that things were able to pick up again. In April, experts predicted a 38% drop in UK house sales for 2020 yet only a 3% reduction in housing prices. They also suggested that the lost sales of 2020 would be carried over to 2021 with 50% not recuperated.
There have been signs of recovery for the housing market. During lockdown, much of the nation has reconsidered their home set-up. Not only has this led to a spike for home improvement purchases from stores like Ikea, it also has reignited interest in the property market. Now that restrictions are lifted, viewings and value chains can resume. In June, 68,670 residential properties were sold. Although this was a 31.5% decrease from June 2019, it is a 50% increase from May. Even with these improvements, the UK housing market is nearly a third lower than in 2019.
Are People Buying Properties?
According to Rightmove, there is an unparalleled surge in post-lockdown buyers. In July, asking prices hit a new all-time high. This is partly due to the newly announced “Stamp Duty Holiday”. In the wake of this government initiative, many have increased asking prices.
Stamp Duty Holiday
Part of the reason for the sudden demand for property is the newly enforced “stamp duty holiday” introduced to re-boost the housing market. This government incentive, backed by Chancellor Rishi Sunak, is a temporary holiday on stamp duty on the first £500,000 of all property sales across England and Northern Ireland. This has made housing more accessible and affordable, encouraging new buyers to enter the market. However, this holiday will not last forever. In October, the furlough scheme will end and many Brits will be unemployed. The boost for the economy, therefore, may be short lived.