Buyers are rushing to take advantage of stamp duty holidays before the deadline for March.
According to the Nationwide Building Society, UK house prices rose in November at the fastest annual rate in almost six years despite the lockdown, as buyers rushed to take advantage of the stamp duty holiday.
In November, the average price of residential property rose to £230,000, up 6.5 per cent compared to the same month last year—the fastest growth rate since January 2015. Prices were 0.9 per cent higher every month than in October, the fifth monthly consecutive expansion, Nationwide said.
The annual rate was well above the 5.5 per cent forecast by economists polled by Reuters. They expected the effects of the national lockdown in England and restrictions elsewhere to reflect a cooling from the 5.8 per cent annual growth in October.
David Westgate, group chief executive of estate agent Andrews Property Group, said a “near frenzied property market” had been created by pent-up demand and savings from the stamp duty holiday, which runs until the end of March.
As a result of a shift towards more homework, ultra-low interest rates and individuals deciding to move home have also boosted demand.
Knight Frank Finance’s managing partner, Simon Gammon, said: “The nation is engaged in a mass rethink of where to live after two lockdowns. ” In rural markets, activity has been solid, as buyers seek better access to green space.
Tom Scarborough, chief executive of Movewise, a property selling company, said properties “have not participated in the price boom in major cities and those without gardens or outdoor space.” He added that before the end of the stamp duty holiday on March 31, there are increasing calls for an extension of the deadline” due to large volumes of transactions.
With only four months remaining before the end of the tax break on the first £500,000 of any purchase of residential property, “vacant and chain-free properties have become highly prized at both ends of the market,” said Nicky Stevenson, managing director at Fine & Country, the national estate agent group.
Since the stamp duty holiday was introduced in July, the housing market has experienced a boom. Given widespread job losses and the economic downturn expected to result from the coronavirus restrictions, the sector was expected to cool in the autumn.
However, as both prices and transactions have continued to grow as purchasers scramble to clinch deals, the property market has defied expectations.
Andrew Wishart, a property economist at the Capital Economics consultancy, said that the divergence between the economy, which is set for its largest contraction in 300 years this year and the rapid annual growth in house prices “was only possible because of extraordinary policy support.” When this is withdrawn in 2021, we expect the pandemic to take its toll,” he warned.”
“Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, echoed, “These figures feel like the storm before the calm.
On Monday, the Bank of England said that in October, mortgage approvals rose to the highest level since September 2007.
Analysts say that a healthy property market is helping to boost construction sector activity and support retail sales related to housing. After a sharp contraction in the spring, both sectors have shown a strong recovery since the summer and into the autumn, partially mitigating the deterioration in other parts of the economy.
Source: Financial Times