To some it may have come as a complete surprise to have witnessed the sharp increases experienced in the housing market over the last few months, it is strange that property transaction activity has been high, yet the economy is going down. In danger, people fulfil only the necessary needs (housing, work, food), the rest awaits or is volatile.
So why the apparent mismatch and what does that mean if you are wanting to move home?
At Open Property Group, we have been looking at why the property market has been strong, and how this affects people looking to move.
There have been several significant changes that have kept the property market fluctuating. Firstly, COVID-19 essentially sent the property market into a deep freeze — prices weren’t going up or down, and the ability to move to a new home was essentially impossible.
However, from the day that the Government reopened the market it has been a different story. Combined with the stamp duty holiday, it has led to what the market is describing as a ‘mini-boom’. July 2020 saw the busiest month for the housing market in 10 years.
So, we have an unique combination of circumstances as pent up demand has been feeding an extremely buoyant property market, demand that has been fuelled by the uncertainty of Brexit over the last two years, and a post Covid-19 lockdown market with properties flooding back onto the market further stimulated by the Stamp Duty holiday.
What does that mean for someone looking to move and to take advantage of the rise in prices?
With so many buyers, it is indeed possible to achieve a house sale quickly, however, that’s not the full story. Accepting the offer is increasingly the easy part of the process, the huge growth in sales and the ongoing restrictions on working practices due to the impact of Covid-19 are taking their toll.
Mortgage lenders are experiencing delays in mortgage application processing due to the volume of applications, land registry searches are often taking far longer than usual, surveys and bank valuations are taking longer to arrange and the overall impact on the conveyancing process is all leading to much longer completion process.
Pre Covid-19, the average time to sell a house from instruction to completion in 2019 was reported as 18 weeks, following our research OPG can confirm that reports of up to 25—26 weeks are now not uncommon, so if you think a buoyant market means you can move home or sell a property quickly then think again.
With the cut-off date of the 31st March 2021 conveyancing experts have been predicting that this could slip even further, however the 26th September has been widely discussed as the key date, any sale after that and you could miss out on the stamp duty benefit. https://www.themoneypages.com/mortgage-home/market-home-26-september-benefit-stamp-duty-holiday/
If you want to sell your house and move quickly to take advantage of the remaining SDLT holiday, be aware that the process won’t be quick. Nonetheless, there are things that you can do to help accelerate the process, as a buyer obtaining a mortgage decision in principle ahead of making an offer or if you are a seller instructing your conveyancer upon listing can help you save valuable time.
Don’t forget that if you are a seller then speaking with OPG can also speed up the process, with no downward chains we can react far quicker than any normal buyer and get you from a property cash offer to completion much faster.
The big question is will this buoyant market continue?
Our view is no. We merely think this is pent up demand and there is too much uncertainty and negative economic news on the horizon. At the time of writing, we have over a third of the country in local lockdown areas, and potentially another national lockdown, In my view, this would be catastrophic for the economy. Furthermore, the country is officially in recession for the first time in 11 years.
Even the experts have split views on this with times to completion now estimated at 25 weeks or more, that takes us past the close of the stamp duty holiday. Will this then put the brakes on the growth we have seen?
Will further Government restrictions due to Covid-19 slow the market or will it have the opposite effect and incentivise more people to look at moving out of the cities?
Buyers and sellers need to be realistic and consider their options prior to listing or looking to purchase their next property. The market is undoubtedly seeing a mini boom, however, how long that will last is anybody’s guess.
Current conditions are potentially short term with the SDLT holiday ending in March 2021 and combined with a challenging set of economic indicators for 2021. The suggestions are that the property market could be returning to a more volatile state during 2021. The Centre for Economics and Business Research has forecasted a 14% drop in house prices by the end of 2021, so if you are thinking of selling now could absolutely be the right time.
Only time will tell, but what we can be sure of is that at OPG we will continue to monitor the market and provide you with an insight into what the implications are.
Watch the video below which explains more about selling your property fast or click here to continue reading this article