The pandemic may have inflicted economic damage across the globe, but house prices seem to be the exception, enjoying their strongest five-month gain since 2004. For a change this is in direct contrast with historically low interest rates in the UK, however, there are some key factors driving these prices up.
Stamp Duty Holiday
Rishi Sunak’s temporary cut to stamp duty in July 2020 means that any property valued below £500,000 will be exempt, encouraging a lot of buyers to act quickly in order to take advantage of savings that could amount to £15,000. However, experts have suggested that this is not the driving factor as the 1.2% increase in house prices will almost certainly outweigh the saving on stamp duty.
Changes in Lifestyle
Following lockdown, more and more people are turning their attention to improving their quality of life and securing more space for them and their families. City-dwellers cast their eye to rural living, seeking outdoor space, and flexible working habits have left more and more people in a position to give up the daily commute and move to the country where they can work from home.
Zoopla have found that house prices in the Cotswolds were likely to fetch a 20% higher price than the equivalent property in Bristol, reflecting the population’s desire for more space.
Low Interest Rates
Low interest rates make securing a mortgage much more appealing to most home buyers. Halifax has reported that mortgage approvals are at a 13 year high, as the urban crowd moves to rural living.
However, this hike in prices is not expected to last. With the stamp duty holiday ending on the 31 March 2021, and the furlough scheme due to finish on the same day, buyers could be demotivated, slowing the recent level of activity in the housing market.