With England enduring another lockdown across November and December, many people have been anxiously looking on at how this will affect the housing market.In the earlier lockdown, the housing market closed, but this isn’t the case this time. Of course, the stamp duty holiday is currently in place, and this is driving a significant level of activity in the property.
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House prices have fallen of late
Rightmove figures suggest the average price of property listed on the market has fallen by 0.5%, which represents a fall of £1,5050 from last month. There is significant buyer demand for homes, but there is a feeling that vendors are keen to conclude deals before the stamp duty holiday deadline.
Rightmove suggest buyer demand is 28% higher compared to this time last year.
Tim Bannister, Rightmove’s Director of Property Data comments: “Given the ongoing mini-boom, prices might have been expected to rise again this month, but instead we have a slight dip which could be a result of some new sellers pricing more realistically to have a better chance of agreeing a sale in time to benefit from the stamp duty savings on their onward purchase. We know from a recent Rightmove study that sellers are twice as likely to sell if they agree a sale based on the first price at which their property goes on the market, something that’s even more important now as we move towards the end of March and the end of the stamp duty holiday.”
Tim Bannister warned that an initial asking price that is too high will cause problems later on. He said; “If your initial asking price is too high then you’re less likely to get an offer even after you’ve cut your price back to a more realistic level. Our revised prediction of a 7% annual increase in prices in 2020 looks to be on track, since the annual rate has jumped to 6.3% with a month to go.”
There is a backlog in the housing market
Rightmove has estimated there is currently 650,000 sales making their way through the buying and sales process. This represents an increase of 67% compared to the number of properties involved in the same process at this time in 2019.
This indicates the significant amount of work being undertaken in the housing market right now. It is no surprise there is a backlog in the market. Equally, it is easy to see why many industry figures are calling for an extension to the stamp duty holiday.
While one-third of transactions currently in the pipeline should be exempt from stamp duty once the holiday ends, this still leaves many which won’t be eligible for a saving. Properties which are priced beneath the stamp duty threshold, or where first-time buyer exemptions are permitted, are not at risk, but others will be.
It is not unreasonable to suggest some buyers will pull out of a deal if they are no longer entitled to a significant saving on stamp duty.
Bannister added: “After some brief hesitation as people waited for the detailed government guidance and legislation, it’s now clear that home-movers are carrying on with their searches and sales during this second lockdown in England with the market staying open. This ongoing activity means that the processing log-jam continues to pile up because of the sheer number trying to reach the finish line by the end of March. With 650,000 transactions in the pipeline, millions of people are on tenterhooks until their sale or purchase has completed.”
We have considerable experience and expertise in the South West of London. We are ideally placed to help vendors, tenants and landlords during this challenging time. If you have any questions regarding the South West London property market, please get in touch with Holmes Estate Agents today.