Housing Prices in The UK Experience Historic High
The average price of a home in the UK increased by £3,000 last month. Even though the country is under a second lockdown the housing market is not being affected. Experts speculate that one of the main reasons for this is the stamp duty holiday. At the moment an average property is priced at £253,243 and that means that the price rose by £15,000 since June. The Halifax claims this is a historic high that can only be compared with the 2004 increase in housing prices. Besides the stamp duty holiday that helped spark the increased activity on the real estate market, the current global pandemic may be an additional explanation. People across the UK had a chance to experience work from home. Furthermore, the experience of being locked in small apartments for months made many people claustrophobic and in need of more space. As a result, buyers are looking for homes that are spacious and suited for work at home. In addition to this, the trend of moving out of the city into rural areas and small towns continues. This change in purchasing is also increasing house prices in areas where they were traditionally lower.
November experienced a 1,2% increase in house prices and this jump coincides with England’s second lockdown. Practically speaking that means that the home prices rose by £100 each day in November. As a result, the annual price growth was at 7,6% and this is the highest figure since June 2016. To contrast this, we should have in mind that the annual price growth was about 2,5% in June this year. Looking at the UK housing market today we can conclude that the predicted hit because of the pandemic did not occur. That is, the stamp duty holiday helped spark a mini-boom in real estate sales and this helped the market get through the dark days of the pandemic. However, this trend cannot be expected to last forever. The stamp duty holiday will end on 31st March 2021 and this may cause a sudden fall in prices. The speculated fall should be avoided and experts think this can be done by an extension of the holiday. That way the surge in activity on the real estate market can stabilise with the additional time and the prices will not experience a sudden drop.
On the other hand, Jonathan Hopper claims that the increase in the activity on the real estate market is not the result of the stamp duty holiday. He maintains that the real factor driving the boom is the fact that people are restructuring their life and goals. Saving a few thousand pounds is not that much of a stimulus for most people. Therefore, it is more probable that other reasons lay behind the recent historic high in housing prices. What will be the result of this increase in prices remains uncertain? Will the market stabilise or will we see a sudden drop in housing prices across the UK in 2021? For the time being, people should use the stamp duty holiday if they were planning on buying a new home. And for those of you that already have one, maybe you should consider selling and use the increase in prices to gain on your investment.
