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An Increase in Buyer Demand
Throughout Q1 and Q2 of 2021, housing demand continued to soar at record high levels. As we sail through Q3 2021, buyer demand has started to ease slightly. During the Easter period, buyer demand was incredibly high, although this has dipped slightly. However, levels are still exceedingly higher than the typical market conditions. Remarkably, levels of housing demand are a whopping 80% higher in comparison to the same period in 2017 and 2019.
As anticipated, the end of the stamp duty land tax (SDLT) holiday did influence activity in the property market. While many buyers were rushing to complete purchases, other aspiring homeowners may have missed out on the stamp duty savings once again. Ultimately, this has caused a dip in demand. A 9% drop was recorded in July, just two weeks after the end of the stamp duty holiday.
What factors are driving prices in the property market?
By the end of summer, property price growth is on track to hit 6%. This heightened growth will plummet slightly by the end of Q4, as expected near the festive season. This is because demand for housing will decline as priorities turn from house hunting to hosting! There are several factors driving the incredible rise in property prices. Although demand has increased by 23%, the supply of homes for sale has dropped. This is primarily due to the lack of new supply entering the market.
Property prices continue to rise rapidly in the North West of England. The strongest performing region is showing a steady and consistent growth of 7.3%. This is the highest growth rate recorded in 16 years!
As we zoom to a city level, we have some fresh names to add to the top-performing list. Alongside Liverpool, Manchester and Belfast, Rochdale and Bolton are also witnessing supreme growth. In 2007, house prices peaked at £177,300. In June, the average house price in the UK rose to £230,700. Increasing by 30% in comparison to the year before.
The annual growth rate continues to increase steadily, indicating this is the prime time to invest in the property market. Therefore, increasing your chance to secure the most profitable long-term investment. The annual growth rate for the UK has hit 5.4%, it is expected to peak at 6% as we head through Q3. The market in the Midlands is expected to pick up as well as the Northern region.
*Figures from Zoopla’s Housing Index Report – July 2021
First-time buyers hoping to step onto the property ladder now have more of a chance to do so. This is because mortgage interest rates are at an all-time low. Although house prices are on the rise, it is much more affordable for buyers to secure a mortgage now.
Not enough housing supply is entering the market; therefore, housing stock remains scarce. Stock levels are running 25% lower than average in comparison to 2020. First-time buyers are flooding the market, as a result, lending is up by 25% compared to the year before. It is important to remember, first-time buyers have nothing to sell. Ultimately, this is causing the supply of stock to plunge significantly.
Astonishingly, Zoopla predicts the number of completed transactions will increase from 1 million in 2020 to 1.5 million by the end of the year. Signifying a robust performance by the property market.
Currently, those who invested in property are seeing huge returns on their investments. This is due to the continuous and steady rise in property prices. If you are looking to dive into your first property investment or hoping to expand your property portfolio – now is a perfect time! The North West, Yorkshire and the Midlands are showcasing incredible growth. However, these markets are still extremely affordable in comparison to the Capital. Therefore, investors can get more for their money!
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