As more sellers bring their assets to market, price growth may slow due to supply shortages and pandemic demand of homes.
THIS YEAR, the UK real estate market is developing like a Hollywood blockbuster. “We got off to a very explosive start, but it was a pretty predictable end,” said Tomville, Knight Frank’s UK Research Director. Real estate professionals believe that the explosive rise in home prices that has been talked about in recent months could slow as the market normalizes. Sellers considering pulling a trigger need to act now to profit from rising prices. Prices will continue to grow, but more slowly.
According to a recent report by mortgage firm Halifax, UK home prices rose at the slowest pace in the four months of July. Property values increased 7.6% in July from 8.7% in June to 4,444 a year ago. Bill expects UK price increases to reach 5% by the end of the year.
This cooldown is a kind of expectation as the stamp vacation is over, the pandemic restrictions have been lifted, and the possibility of a rate hike is imminent. But for now, demand remains, and sellers need to act swiftly to take advantage of it. Nicky Stephenson, Managing Director of the Fine & Country Real Estate Group, shared the insight.
Low Housing Supply Creates Competition
Supply shortages have fueled price increases in recent months as sellers are hesitant to list their characteristics within the limits of the coronavirus. The market of “house for sale in London” faces major competition. Marcus Dixon, Research Director at LonRes, said: Some sellers rejected the list of homes because they couldn’t find a new property to buy. So, this created a “vicious circle” of reduced availability of homes.
However, he predicts that the vicious circle will be positive later in the year when sellers return from summer vacation and begin to market their assets. Mrs. Stephenson agrees. “If people don’t take the plunge and put their property on the market, they’re all on the same ship,” she said. “When people realize they have more choices, they too will put their property on the market.” Sellers are better off listing early rather than later if they want to take advantage of properties that are low in stock and therefore less competitive.
“Many bids are being made for the right property at the right price,” said Francis Classy, a research analyst at Savills. As of that time last year, about half of Savills agents said they saw the transaction end in the bidding process. In the second quarter of 2021, two-thirds said they saw it. Real estate also disappeared from the market sooner than usual. According to Lightmove, the average time from market to sale in August was 38 days, four weeks faster than in early 2021. “This is one of the reasons we are considering moving now,” Stevenson said. “If you want to make a plan, you can do it without having to wait another four weeks to find the buyer. This can affect your travel schedule.”
An Opportunity for Country Home Sellers
Domestic sellers will successfully take advantage of the space race triggered by Covid. “It will last longer than the blockade,” Bill said. “This will make a big difference in how people see where they live.” “At the first blockade, everyone wanted a garden, and they didn’t have to be near their workplace,” Dixon said. As a result, prices could rise by 20% outside London, especially in South West England. This demand for larger real estate has helped prices increase in regions such as northern England and Scotland. According to Classy, country homes priced above £ 2m have been better than ever since the recession in 2007. She added, “Since the credit crunch, we have tended to move to the city center, so there wasn’t the same price increase there.” “Today, we saw the opposite.”
Tax and Interest Rate Changes Ahead
The price slowdown is also related to the end of the UK stamp duty freeze on June 30th.
This program provided buyers with tax savings of up to £ 15,000. This may not be important for high-end buyers in the housing market, but it may not be irrelevant. “No one is going to say no to the £ 15,000 savings,” Dixon said. The holiday also gave buyers more confidence in the housing market. “It set the mood for the entire market,” Bill said. “There is a sense of urgency and on-time delivery.” Without it, buyers may not be ready to respond so quickly. London investment agents have had their hands full with the cut throat competition in the market.
