UK Housing Market Snapshot: Is Now A Good Time To Move ?


Even if moving home is not your radar right now, current property market conditions could make the prospect worthy of consideration

Aerial view of crowd connected by lines


Back in the spring, almost nothing was happening in the property market.

Coronavirus lockdown guidance stipulated that all exchange dates should be delayed, while those who had already exchanged contracts on a new home should agree a ‘contractual clause’ to stave off completion.

Today, the story could not be more different – having officially ‘reopened’ on 13 May, the housing market finds itself the throes of a mini boom.

According to property website Rightmove, the number of homes where sales are agreed within just a week of their hitting the market is 125% up on this time last year – and it has hit its highest figure for 10 years.

A separate survey of 1,400 registered buyers and sellers at estate agent Savills found that 21% more people in early September were committed to moving within the next 12 months compared to mid-lockdown.

The number rises to 25% in London as more permanent work-from-home arrangements mean home-hunters are able to cast their nets further afield to the suburbs and countryside.

It’s worth noting that, as the Land Registry records property completions around eight to 12 weeks after they take place, its data will not reflect the current market uptick. Its latest report is also based on estimates due to incomplete data during lockdown.

Stamp duty savings

One of the primary drivers behind the current house-moving surge is undoubtedly the current stamp duty reprieve.

On 8 July, the government temporarily lifted the threshold at which the property tax becomes payable from £125,000 (or £300,000 for first-time buyers) to £500,000.

The break applies to all property purchases – including second homes – in England and Northern Ireland that complete by 31 March 2021 and will generate savings for buyers of up to £15,000.

In Wales and Scotland, where buyers pay Land Transaction Tax and Land and Buildings Transaction Tax respectively, starting thresholds have been increased to £250,000 – again up until and inclusive of 31 March.

The stamp duty 3% surcharge (or 4% in Scotland) payable on additional properties – typically second homes and investment properties – is still payable, however.

But if you want to beat the stamp duty deadline of 31 March next year, you will need to act soon, says Miles Shipside, property expert at Rightmove:  “Getting your property ready to sell, finding an agent, marketing your home, finding a buyer and then going through the conveyancing process doesn’t leave much time for any unexpected delays along the way, especially if you’re in a chain.”

Buyers and sellers should also factor in some potentially lengthy delays as both conveyancers and mortgage lenders struggle to process a backlog of cases from lockdown as well as a surge of new ones.

Robust house prices – for now

If you’ve decided you’re on board with moving, what kind of prices can you expect when it comes to selling your current home and negotiating on a new one?

According to Halifax’s latest house price index, growth in the property market is the strongest it’s been since 2016.

It found that average property prices across the UK climbed by 1.6% in August and stand at 5.2% higher than the same time last year. The average cost of a property also tipped over £245,000 for the first time.

Russell Galley, managing director at Halifax, said: “A surge in market activity has driven up house prices through the post-lockdown summer period, fueled by the release of pent-up demand, a strong desire among some buyers to move to bigger properties and, of course, the temporary cut to stamp duty.”

However, he added that a rising market jars with the adverse effect that coronavirus has had and is having on household finances – and that house prices are likely to come under downward pressure in the medium term due to redundancies and fears about job security.

As things stand though, two- and three-bedroom houses are easiest to sell according to Rightmove, 19% of which come under offer within a week of being listed.

Perhaps unsurprisingly, larger five-bedroom detached homes are slowest to shift with just 10% selling within this time-frame.

Borrow at low interest rates…

In response to the coronavirus outbreak, the Bank of England slashed interest rates twice in March down to a nominal 0.1%.

This has helped produce some of the cheapest mortgage rates in history – especially for borrowers with a deposit or equity of 40% or more of the property value.

As an example, HSBC is offering a two-year fixed rate mortgage priced at just 1.14% for a £999 fee and has a five-year equivalent deal priced at 1.34%, according to independent mortgage broker London and Country.

… if you can get a mortgage

But low lending rates are only relevant if you can access a mortgage in the first place.

Bank of England lending figures for Q2 (April through to June), showed the value of mortgages agreed for the coming months was down by 53.2% compared to a year ago, and is the lowest figure for 10 years.

This is, in part, due to some mortgage providers adopting a more cautious approach to lending post-coronavirus, especially towards borrowers applying with a small deposit (10% or less) or for a bigger loan in relation to their income.

Lenders may also tread more carefully if you have been furloughed or otherwise financially impacted by coronavirus. And even with a solid ‘belt-and-braces’ mortgage application, you can expect delays due to capacity issues.

The good news is that mortgage agreements are typically valid for between three and six months, so at least you can apply well in advance. Completion deadlines vary from one lender to another however, so be sure to check.

David Hollingworth at London and Country said: “While applying so early can potentially reduce the available choice of deal, rates aren’t likely to go much lower and in the current market it’s better to err on the side of caution and give yourself plenty of time.”

Coronavirus mortgage payment holidays

If you are a homeowner who has taken advantage of the coronavirus mortgage payment holiday, it’s worth flagging that how this affects your credit score could be set to change after 31 October.

Under proposals set down by regulator the Financial Conduct Authority, if you apply for new mortgage payment break (or extend an existing one) after this date, it will be recorded on your credit report – something that had not previously been the case.

Your credit report will be checked not only when you are applying for a new mortgage but when you transfer an existing deal to a new property – known as porting – such as in the case of a house move.

This may be something to factor into consideration if you are looking to move any time soon.

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