While there has been a rise in house prices and demand after the market reopened and the government announced its stamp duty holiday, this is expected to be short-lived and followed by a fall in prices, according to a report from the Resolution Foundation.
With unemployment rising and the UK entering recession after the Coronavirus lockdown, its forecast is for house price decreases of anything between 2% this year to 22% by the third quarter of 2021.
First time buyers with stable jobs who’ve been able to put more savings aside during lockdown will benefit, the Resolution Foundation says, but others may find a number of barriers between them and their first home.
For one, lenders are likely to ask for larger deposits to protect themselves, so potential buyers will find themselves saving for longer. And the stamp duty holiday won’t help most first time buyers, who wouldn’t be buying a house of a high enough value to benefit from the saving.
So where is the stamp duty holiday making a difference?
The housing market was starting to move again after Coronavirus lockdown restrictions were lifted. Data from HM Revenue and Customs (HMRC) shows 68,670 residential properties were sold in June – a 50% increase on May’s figure.
But it seems since the stamp duty holiday was announced in early July, homebuyers have made the most of it to bring forward their plans to move.
According to data from estate agent Hamptons International, there were 38% more prospective home buyers from 8 July-8 August 2020 compared with the same period last year, with the largest increase in homes worth between £500,000 and £750,000.
Aneisha Beveridge, head of research at Hamptons International, said: “The introduction of the stamp duty holiday has given a further boost to the housing market which was already showing strong signs of recovery even before its introduction.
“The number of people looking to buy a home has risen across every region in Great Britain since the announcement, with southern areas recording the biggest increase.
“It’s in these regions, where house prices tend to be higher, that buyers stand to gain the most from the holiday.
“While it’s still early days, the data suggests that house prices seem to be stable, with homes under offer achieving a record share of their initial asking price.”
The stamp duty holiday isn’t the only reason people are taking the opportunity to move – people are also looking for homes with more space after the Coronavirus lockdown.
“While the stamp duty holiday has boosted the market, the impact of two months lockdown shouldn’t be ignored either.
“Having spent more time in our homes, many households have decided to bring forward moves.
“With space topping buyers wish lists, demand for homes in the suburbs and country locations has increased the most, and it’s these homes that are most likely to sell above their asking price.”
The stamp duty holiday will officially end on 30 September and return to its original rate from 1 October 2021.