Today’s property market is still being heavily influenced by the lack of housing supply following the pandemic and subsequent stamp duty holiday.
Although restrictions are now over, the pandemic caused a widespread re-evaluation of our priorities, and this included what we want and need from our homes. Rather than living in city centres close to transport links, given that home working looked set to stay for the foreseeable future, people wanted more space for home offices and the ability to enjoy their garden, given that travel all but stopped for many months. In addition, there was a race to purchase a new home without stamp duty (LBTT) taxes, giving a huge saving.
But now we are two years on and there are still many buyers looking for more suitable homes. However, the market simply hasn’t balanced out and supply is still unable to meet this demand. According to recent reports from Knight Frank, this supply shortage will carry on until the end of this year.
Inflation is currently at a 40-year high and interest rates at the highest rate in 13 years. According to ONS data, annual house price growth rose to 12.4% in April and lenders including Nationwide and Halifax reported double-digit growth in May.
In the latest quarterly house price index, UK house price forcasts have been put up to 8% from the previously predicted 5% in 2022. The reason for this revision is that the low levels of homes available to the number of buyers doesn’t appear to be easing off.
However, the number of listings has risen over the last few weeks given that the Bank of England has put up the base rate to 1.25% and issued a several stark economic warnings. More sellers have come forward with the belief house prices may finally be peaking. In the summer months there will be further pressure as corporate tenants and students seek new homes.
The report also indicates that stock levels to be particularly squeezed over the summer as high demand from corporate tenants and students exceeds available supply.