Insight from expert property valuers - London house prices and Covid

We saw an unexpected rise in the property market during the second half of 2020, as house prices kept on rising despite the dampening effect of covid. So will it carry on, even though the government’s stamp duty reduction comes to an end in a couple of months? As city property valuers, London is our focus. We thought it’d be interesting to take a look at what people are saying.

Britain’s property markets remain open

Across the UK estate agents are still carrying out house viewings in person, and buyers are still allowed to move house. From last summer there’s been an ongoing property market rise, mostly inspired by the government’s temporary cut to Stamp Duty. In a best case scenario, the cut saves buyers as much as £15,000 in tax – on a half-million pound property – simply for moving before the end of March. HMRC says 115,190 property sales went through in November 2020 alone, up 19% compared to 2019.

What do the UK’s estate agents and lenders say?

The Land Registry’s UK House Price Index, based on sold properties and including a two month delay, says the price of UK properties shot up by 1.2% month-on-month and 7.6% year-on-year in November 2020, ending up with a national average of £249,633.

Rightmove, the country’s biggest online real estate portal and property website, also maintains an index, and theirs is based on asking prices. It’s also more up to date. Their January 2021 report says average asking prices dropped 0.9% month-on-month while rising 3.3% compared to January 2020. Nationwide building society says it saw a 0.8% monthly and 7.3% annual rise in house prices last December, and the Halifax claimed an annual rise of 6% for 2020.

Will it last? Some say yes, others disagree. We’ll know more when the government’s covid support schemes end and the Stamp Duty holiday closes.

Rightmove forecasts a 4% rise for 2021
Zoopla says annual house price growth will hit 5% in February then drop back to 1% by the end of the year
The Halifax predicts a drop of 2% – 5%
The estate agent Savills thinks house prices will stagnate in 2021
Hamptons estate agents also believe prices will stay the same this year
The estate agency Chestertons is looking at a 1.5% increase
Knight Frank estate agency has hung its hat on a 1% rise
The Centre for Economics and Business Research has opted for a drop of 5%

Mixed messages about delays in the buying process

The current stamp duty cut means estate agents, house surveyors and conveyancers have been unusually busy, and this has slowed down the moving process. Some mortgage valuations are taking months to come through, and conveyancing is jamming up as well. Rightmove says there are more than 600,000 properties stuck at the ‘sold subject to contract’ stage right now. On the other hand they also say the average time to agree a sale was just 57 days in December 2020, while a year earlier it took an average of 71 days.

Stamp Duty holidays and mortgage shortages

We still don’t know if the Stamp Duty cut the government made will be extended past the end of March. The government, so far, has refused, but you never know. It could easily happen. There are also question marks around the availability of mortgages, since the pandemic has effectively halved the number of available mortgage deals. All the same, if you’re lucky enough to have a decent deposit there are some very good deals around, and plenty of banks have launched 90% mortgages, something we haven’t seen much of in recent years.

Hang onto your hats – We’re here to help!

It’s very hard to predict the future of house prices at a time like this, if not impossible. There are so many different risk factors to take into account around the virus, lockdowns, and jobs. As expert property valuers, London based with a finger firmly on the city’s pulse, we’re doing everything we can to support our customers in quick, efficient purchases. If you’re buying a place in the capital, get in touch for reliable, professional survey and valuation expertise.

Source: https://www.which.co.uk/news/2021/01/how-will-the-coronavirus-affect-house-prices/