Sharp rise in August, usually a quiet month, in property
In August, mortgage approvals increased drastically, taking it to the highest monthly level for nearly 13 years. This can be seen to be the result of the government scheme to help people during the current global pandemic, where people have decided to buy homes that are not in large centres in Britain.
Next March, low borrowing rates and the government’s stamp duty is due to expire, and this helped mortgage approvals rise from over 66,000 in July to over 84,500 in August since October 2007, according to Bank of England figures. Normally, August is a very quiet month in property, where most of the nation is on holiday, however this year was very different.
Since the outbreak of the coronavirus, the property market has been very unpredictable. In May, the property market hit its lowest level since the early 1990s. Despite the increase of mortgage approvals and buy-to-let in August, the overall rate of mortgage approvals have been down in comparison to previous years.
Despite the rate not being as high as previous years, the pandemic has encouraged people to think about their living space and has led to some reconsidering living in urban areas. Since spending more time at home, indoors, working, some have considered buying larger homes to ensure that there is lots of space in their home for when they are unable to go out or need to work at home.
Samuel Tombs, chief UK economist at Pantheon Macro economics, said “The outlook for a further drop in employment also will weigh on the housing market, though with home-ownership having narrowed to a wealthier segment of the population over the last decade, job losses won’t have as devastating an impact on the market as they did in 2008”.
Whilst many wealthy property buyers are keen to buy properties, many are still wary about where they are putting their money as a result of the unpredictable few months experienced and for what is to come. This is seen to continue as people are expecting a drop in employment since the furlough scheme is due to end at the end of October, and this will weigh on the housing market.
More specifically, economists have warned that many low-income mortgage lenders could find themselves in financial difficultly once the holiday regime ends and more people are made redundant, with more people finding themselves looking for jobs that are not around.
For this reason, the government need to act now in order to protect home ownership, especially for families that have been unemployed or are on low incomes.
