Stamp duty changes fuel the housing market | August 2020
01/09/2020
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London
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England and Wales
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Average House Price
Most recent Land Registry data May 2020
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£479,018
up 3.3% YOY
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£247,331
Record High - up 3% YOY
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Average Sales Volume
Most recent Land Registry data March 2020
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5,392
down 24.9% YOY
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49,737
down 31.6% YOY
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Headlines for August 2020
- 10% of properties sold over asking price and 60% under asking price
- Mortgage approvals for home buyers up 40% MOM but down 1% YOY
- Number of sales made to FTBs fell to 25 per cent in July
- Number of house hunters per estate agent branch rose from 379 in June to 428 in July
- Average annual salary remains the same as June 2020 at £27,560
The housing market is not letting up as August sees sales volumes on the up. The NAEA reported an average of 13 sales were agreed per branch in July, the highest figure recorded since June 2007. The stamp duty changes and pent up demand post Brexit/lock down are fuelling this surge. However the question is how long can we keep going at this rate?
The conveyancing sector can't cope
Considering only 4 months ago the housing market was put on freeze, the acceleration to where we are now is something that those working in the housing market are struggling to cope with. With furloughed workers coming back and some law firms and estate agents hiring again after letting staff go, there is also the fear off another lockdown coming this Winter and bringing an end to the mad rush.
At the moment home buyers are encountering:
- Delays with local authority searches
- Mortgage applications taking longer including valuation turnarounds
- Solicitors working with less lawyers and more work
- Surveyors booking 3 weeks in advance
- Estate agents busy with viewings with smaller teams
Bank of England Reports a fall in remortgages
Whilst the number of house purchases increased to 66,281 in July 2020, the number of remortgages fell YOY by 25% to 36,133. A sign that uncertainty around the job market is leading to home owners sitting tight and not changing their mortgage. How many home owners are locked into their mortgage who can't afford to remortgage?
NAEA reports record highs
- 10% of properties sold for more than the original asking price and 60% sold for under
- An average of 13 sales were agreed per branch in July, the highest figure recorded since June 2007
- Number of house hunters per estate agent branch rose from 379 in June to 428 in July
The NAEA CEO Mark Hayward states, "we expect the housing market to remain busy throughout the rest of the summer."
What is happening to the first time buyers?
Whilst in July we saw a fall in first time buyers our opinion is that they are making way to second home movers looking to take advantage of the £15,000 SDLT saving on offer until the 31st March 2021. What this will do is increase the average house price in the England and Wales as there will be more family home transactions that have a higher house price compared to the average FTB property price.
Still no New Build Data
Ministry of Housing, Communities & Local Government Live tables on house building of new build dwellings haven't been updated since the 26th March 2020. With 2 quarters of data not yet showing we can only speculate that lock down has had a material effect on the number of new build developments. How few have been built we won't know until new data is released.
In 2019 there were 178,790 new builds completed. However with Help to Buy pulling funding for 2021 will we see the same levels?
What are the risks of a second lockdown?
This is the burning question because many professionals are concerned that the housing market will be placed in lockdown again this Winter. The recent change to limit large gatherings of more than 6 people on Monday 14th September will only fuel these concerns.
What no one wants to see is another intervention by the Government stopping house viewings like they did in March as this place the market on freeze, something which will jeopardise many chains if it happens again this Autumn/Winter.
Andrew Boast, co-founder of SAM Conveyancing, said:
"It is very exciting to see the housing market continuing to grow after the shock of being frozen. It is great to see second home movers coming back to the housing market. The burning questions though are, how long can the market continue to grow at this rate and do you look to aggressively grow or consolidate? With the stamp duty holiday set to end at the end of March the housing market has another 7 months of this to enjoy / cope with!"
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