If the dust from the initial impact of COVID-19 settled a couple of months ago, it has now all but been vacuumed up as there has been a surge in activity in the housing market resulting in some surprising trends in both prices and sales numbers.
Going by the latest Halifax House Price Index, the average price of a home was £241,604 last month, 1.7% higher than the £237,834 June figure.
Prices in August 2020 are also 3.8% higher than in July 2019.
“Pent-up demand and a lack of available houses had combined to push up prices.” says Halifax managing director, Russell Galley. “The government’s recent cut in stamp duty had also boosted buyers’ enthusiasm” he added.
Last month the Chancellor & architect of the COVID-19 economic recovery, Rishi Sunak announced a suspension of stamp duty, albeit temporary, on property sales up to £500,000 in England and Northern Ireland to help bolster sales in the residential property market.
The RICS (Royal Institute of Chartered Surveyors) monthly house price balance rose from June’s -13 figure to to +12, which was surprisingly above all forecasts in a Reuters poll of economists. London was the only region in the UK to show a fall in price last quarter and even in that case the rate of decline has slowed in the last month.
In the buy-to-let market, mortgage arrears have risen by an unexpectedly low 6 per cent in the second quarter of this year, no doubt helped by the government measures put in place to mitigate the effects of the coronavirus pandemic.
The Arrears and possessions data from UK Finance, published on August 13th, showed the number of buy to let mortgages in arrears of above 2.5% of the outstanding balance reached 5,000 in Q2, up 6% from the same quarter in 2019, where 4,720 were recorded.
UK Finance acknowledged the latest figures were still relatively insignificant and had come from a low-base already. They also said the increase was most likely due to the initial effects of the coronavirus and added that levels of arrears had remained lower than seen in previous years.
Overall, the market is as healthy as can be given the situation, at least for the time being.
A second wave of COVID-19 is expected by some, and while the world scrambled to react when the virus first hit, we can assume with relative safety that we will collectively be more prepared this time round should another wave hit. Businesses, including our own, learnt how to operate remotely where necessary and estate agents, banks & mortgage lenders are no exception so any amount if disruption to the market is likely to be minimised.
For now, it’s business as usual.
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