In March, the UK government urged the public to delay moving houses during the pandemic in an attempt to limit the spread of coronavirus across the UK, effectively freezing the housing market. In addition to this moving freeze, a significant number of construction projects were stalled as a result of social distancing guidelines. However, from the 13th of May, updated rules enabled house moves and viewings to resume. The government’s decision to re-open the housing industry had an immediate impact, with house prices growing by 2.7% in the month of June from a year earlier, the fastest pace in nearly two years.
Online estate agent Zoopla have predicted continued ‘house price growth at current levels over the second half of the year.’ In the latest polling conducted by Redfield & Wilton Strategies, a slight plurality (31%) agrees, saying they believe house prices in their area will increase in the next year.
Nevertheless, 23% of the UK public believe that house prices will decrease in their area in the next year. However, it seems the largest proportion are in fact those who have not made up their mind, with 30% saying that prices will ‘neither increase nor decrease’ (30%) and 17% who don’t know (17%), underlining that many consider the housing market to be unstable given the continued presence of coronavirus. Respondents in London (37%) and the South West (36%) were the most likely to believe that house prices will increase in their area over the next year.
Interestingly, across the UK, younger people aged 18-24 (46%) and 25-34 (45%) were the most likely to predict a rise in house prices—and they might be right to be alarmed. While first-time house buyers, who tend to be younger people, were already largely exempt from stamp-duty, Sunak’s announcement of a stamp-duty holiday may cause house prices to rise as some of the tax break is captured by sellers, which would be punishing for first time buyers.
Initial analysis of the impact of the stamp duty holiday has found that the measure has in fact disproportionately benefited wealthier buyers. House sales in London have jumped by 27% in the first two weeks of the stamp duty holiday, whereas newly agreed sales in other UK regions rose by just 6%. Nevertheless, although the stamp duty holiday has had minimal impact on most areas outside London, demand for homes in northern cities has bounced back significantly: in Sheffield, buyer demand is up 46% compared to 2019, and in Liverpool and Manchester the supply of homes to purchase is down by at least 16%. Increasing demand in cities across the UK may boost house prices in urban centres, yet only a slight plurality (31%) of respondents think that house prices will increase nationally in the next year. A significant minority (28%) believe house prices will stay the same, regardless of Sunak’s intervention into the sector. 22% of respondents state that they think house prices will decrease in the next year, which may be due to a belief that there will be a second wave of coronavirus, which could initiate a further national lockdown and ultimately stifle demand.
A plurality (39%) of respondents consider that now is not a good time to sell a property in their area, yet an equal proportion (39%) ‘don’t know’ if it is a good time to sell a property. Only 22% think that it is a good time. Overall, the UK public remains relatively wary about selling a property at this stage. It may be the case that respondents believe the coronavirus pandemic has depressed demand, and therefore house-sellers will not be able to get a good price for their property. Among those who do think it is a good time to sell, some may consider that a further national lockdown will depress prices further, and therefore selling prior to this would be a smart move.
A clear plurality (40%) of the public ‘don’t know’ whether it is a good time to buy a property, which may indicate that a sizeable proportion of the public is unaware about the state of the housing market, or could also highlight that the public is aware of the volatility of the UK economy at this current stage. Nevertheless, over a third (34%) of the UK public believe that now is a good time to buy a property, while 26% think it is not a good time. Interestingly, 43% of those aged 25-34 –– an age bracket which may be most likely to purchase a first home –– consider that it is a good time to buy a property.
Despite predictions by industry experts that house prices will rise over the next several months, a large proportion of the public remain sceptical, and many think they will decrease both within their own area and on a national level. The UK public are also split on whether it is a good time to sell, or buy, a property in their own area, which provides further evidence of the economic uncertainty experienced by many at this stage of the coronavirus pandemic.