Property Boom Leads to Record House Prices

House prices continue to rise strongly, according to the latest index from Nationwide building society, surging at their fastest pace in more than 17 years. The increase in prices over the past year has confounded forecasts from all the major estate agencies and economists who predicted that the housing market would be severely impacted by the pandemic and first national lockdown, when it effectively closed for business.

Yet Government support programmes in the form of the furlough scheme, stamp duty holiday and 95 per cent loan-to-value mortgage guarantee scheme, combined with a desire for more space and less need to work in the office in future, has fuelled a housing boom. Interest rates are also at record lows and unlikely to rise anytime soon, resulting in some extremely cheap mortgage deals.

The lack of supply, coupled with significant demand, is pushing up house prices, particularly as many buyers are armed with large, cheap mortgages. Lack of ability to spend during lockdown also means many have saved up significantly bigger deposits than they otherwise would have been able to.

But while it is a sellers’ market, it is not uniform across the board. Houses with gardens outside of city centres have done particularly well, while small flats with no outside space in urban settings, have not performed as impressively. In London’s suburbs, house values have increased considerably so if you are in the fortunate position to already own such a property and have not remortgaged for a while, it may be worth looking into refinance options. You will have better leverage, as well as being able to access lower rates.

While the stamp duty holiday has been extended beyond its 31 March deadline, it is set to come to an end on 30 September with tapering from the end of June. This, coupled with the end of the furlough scheme, may mean an uptick in unemployment, which could dampen activity in the housing market.

However, the continued rollout of the vaccination programme and expected boost to the economy as lockdown restrictions ease, means the indications are that we are likely to see a dip in prices rather than a crash. Until we build significantly more homes, there is always going to be this imbalance between supply and demand.

How AWS Private Finance can help

If you are keen to join the many thousands of people moving home, the good news is that it has never been a cheaper time to borrow. With discounted-variable rates available from less than 1 per cent and five-year fixes starting at less than 1.5 per cent, there are plenty of competitive deals available.

However, with so much choice, it is worth seeking advice, particularly if you have complex income arrangements, are self-employed, a day-rate contractor or require a large mortgage. AWS Private Finance is a whole-of-market broker so will compare what is available on the market, guiding you through the mortgage process, and ensuring you get the right deal for your circumstances. Please get in touch for more information.

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