As we move into the second quarter of 2021, residential property specialist, Victoria Cranwell, considers the immediate prospects for the housing market.
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Last week, the National Association of Estate Agents (NAEA) said that “agents around the country have reported extremely busy housing markets”, possibly early signs that measures contained in the Budget to provide further stimulus to the market are bearing fruit.
Supply vs Demand
According to Zoopla, buyer demand spiked by 24% in the week following the Budget, principally a result of the extension to the Stamp Duty holiday. Overall demand that week was 80% higher than in that same week over the previous four years. Zoopla predicts that by the end of June, a whopping 500,000 people will benefit from the extension, after which the relief tapers for three months before Stamp Duty reverts to normal from October.
In February, we reported that while demand was buoyant, supply was a significant issue. Figures published by Rightmove showed that in January 2021, the number of new properties coming to market was 21% down on the same period last year. Anecdotally, many estate agents were citing the challenges of lockdown as the reason many people did not feel the time was right to market their home. In addition to juggling work with home-schooling, the pandemic has, understandably, dampened enthusiasm for opening your home to strangers, whatever precautions are in place.
Now, with children back at school, further easing of lockdown restrictions from today, and a warm weather spell predicted, the NAEA says that agents are “bracing themselves for increased activity as we move into Easter”.
There is also now evidence that hesitant sellers have woken to the fact that this is a prime opportunity to sell, even if they are not quite ready to commit to an immediate purchase. Rightmove reports that one in five properties currently marketed on their site is now chain-free, up from around one in six this time last year. They say there has been a 72% increase in the number of potential buyers searching for “no chain” in their keyword sort tool. Sellers with no related purchase is undoubtedly a factor in rental demand being 41% higher than a year ago.
Low deposit mortgages
A buoyant market is always dependent upon the entry of first-time buyers and the dearth of high loan-to-value mortgages had become a real problem for many. However, the Chancellor’s new low-deposit mortgage guarantee scheme announced in the Budget proved a rapid incentive for lenders, as the Yorkshire Building Society became the first mainstream lender to relaunch a 95% mortgage product, with the Skipton Building Society hot on its heels. Others are expected to follow shortly.