House prices: Property market slowdown good for long term stability
Long-term stability in the housing market could be on the cards thanks to a gradual slowdown in house price growth and easing of government support, according to industry observers.
Figures published by both Zoopla and Rightmove show that, although house prices are still outperforming the same period in 2019, growth compared with April and May is slowing.
While the Stamp Duty Holiday threshold has now been set at £250,000 until the end of September, the reduction of the discount is having the calming impact that many in the property sector had anticipated.
However, indications are that those people who agreed sales in April and May are still going ahead with their purchases.
Figures released for June show a buoyant market, but that demand is still outstripping supply significantly, forcing house price increases.
This is more acute in rural areas where people with top of the ladder homes in cities are selling to move out to the countryside where they can afford a larger property that enables a desired lifestyle change, according to Robert Burdett, managing director at James Leigh Property Management.
Not only that, but as 19 July approaches, businesses can, with some certainty, provide valuable information to employees on plans going forward, with many indicating a more flexible approach to working conditions, he added.
First-time buyers
In the first-time buyer market, access to a broader range of mortgage products, the return of 95 per cent LTV products, and the government’s Help to Buy scheme means that access to finance is easing and this segment of the market is picking up pace again.
“It is clear that throughout the pandemic people have continued to buy and sell homes, and are set to continue to do so. The first-time buyer market and top-of-the-ladder market are very buoyant, so on the face of it, a slowdown could be viewed as negative,” Burdett explained.
However, he argued that is not the case.
“We need the market to take a breath and allow more properties to come to market to improve the current lack of supply so that house prices stabilise to a more sustainable level of growth,” Burdett said.
Continued house price growth has also meant that around 1.8m homes have moved into a higher Stamp Duty band.
Homebuyers continue to search for homes that offer more space, including home offices, rural areas with access to the cities. Properties that offer the opportunity to make lifestyle choices remain highly sought after.
“Buyers are looking for particular features in their new homes, including office space, larger gardens, and rural areas, so there will be pressure on prices for these types of properties and locations,” Burdett noted.#
So it’s critical that the supply of properties with these features and in these geographies come to market.
Burdett expects the market to slow temporarily as the supply issue resolves itself.
“I anticipate that those sellers who have been holding back from putting their properties on the market during the pandemic will now start to do so in the coming months,” he concluded.