The UK property market has been upbeat over the last few months with Government initiatives like the stamp duty holiday and furlough continuing to boost the market. The stamp duty holiday, which has been extended until June 31 for homes priced at £500,000 or less, has saved buyers an estimated £3.1billion since it was put in place last July. Spring is known as one of the busiest periods for Britons buying and selling houses.
But what can we expect from the property market further down the line?
David Hannah, Founder and Principal Consultant of Cornerstone Tax, discussed the state of the housing market in Britain today, and looked ahead to offer key factors to bear in mind that will likely reflect the market trajectory for the coming year.
He said: “Unlike many other industries, the UK property market has proven its strength and resilience over the past few months.
“This was in no small part due to the Government’s determination to prop up the market by introducing the stamp duty holiday.
“Unveiled by Chancellor Rishi Sunak in July, the holiday has been credited with fuelling a mini-boom in the property market.
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Gardens and a home office are also likely to be prioritised.
The mass exodus out of cities will also likely continue as people look to get more for their money and work remotely.
The property tax expert said demand for rural and ex-urban properties will likely rise with inner city homes with no gardens being less attractive which could result in price drops.
He added: “However, a relaxation of lockdown rules may result in many businesses reintroducing on-site working practices and the reopening of many of city centres’ cultural attractions – it will be intriguing to see how this will impact the market if the prospect of a long commute from outside the city comes back into play.”
Stamp duty extension and vaccine rollout
Mr Hannah said: “At the start of 2021, many feared that there would be a spike in the market as buyers rushed to complete transactions ahead of the original end of the stamp duty holiday in March.
“However, the stamp duty holiday has now been extended into the summer, affording more time for the vaccine rollout to progress and for lockdown restrictions to be eased.”
The property tax expert said he expects the summer cooling off period will not materialise.
Instead, he thinks the market will see sustained activity increase into the summer and autumn.
The pandemic fallout
Although it’s likely the market will continue to be sustained, there could be a slump in the market at the end of 2021, according to Mr Hannah.
Currently, Government support initiatives are propping up people’s finances and acting as a “buffer for the housing market”.
Mr Hannah said: “Though we are likely to see activity sustained for many months this year, the end of 2021 could spell a slump in the housing market, as the long-term effects of the pandemic begin to come into play.
“This year will see the end of government support measures which have protected people’s finances and acted as somewhat of a buffer for the housing market.
“When these schemes come to an end, the true economic impact of the pandemic will come to light and will likely contribute to a sharper drop in the market.”