Housing market braced for a post-lockdown surge
The high level of transactions we saw carried over from the latter half of last year into January 2021 has now hit a roadblock with demand far exceeding supply in the prime residential market.
Given the lack of stock, buyers are reluctant to sell their own homes which in turn has created a vicious circle. The incorrect perception that the housing market is closed for business is another factor creating a drag on the market.
However, we are very much open for business and know that the demand is there. In Perthshire and Kinross-shire for example, we are seeing offers accepted within hours of being listed on our online platforms. Private deals are also becoming more common with properties snapped up before they’ve even hit the market.
More good news for sellers is that the market is attracting serious cash buyers with no chain to hold them up. Any available properties are selling fast, often achieving 10-20% over the asking price.
Looking ahead, there are plenty of reasons to be optimistic that the situation will improve, and estate agents are holding their breath in anticipation of a much-needed housing boom when lockdown eases in April and May.
In his Spring Budget, Chancellor Rishi Sunak chose to keep the fire under the property market alight by extending the stamp duty holiday from the end of March to the end of June. After this date, the starting rate of stamp duty will be halved to £250,000 until the end of September.
However, Stamp Duty is only applicable in England and Northern Ireland, and it will be interesting to see if the Scottish Government follows suit with the Scottish equivalent, the Land and Buildings Transaction Tax (LBTT), as Ministers previously indicated the LBTT holiday would end in March
The Budget announcement of a mortgage guarantee scheme to help people with small deposits get on the property ladder by offering incentives to lenders to provide 95% mortgages is most welcome. This will help first time buyers get onto the housing ladder which in turn stimulates the rest of the property market and increases property transactions
Simultaneously, the Chancellor is easing the UK from an end-of-furlough cliff edge and has turned away from increasing capital gains tax - an increase in CGT could have dented the holiday home and investment sectors. These moves point the way to a lively property market through 2021.
With the public looking forward to the stepped retreat from lockdown and many people planning new ways of working between office and home, there are compelling new opportunities for buyers looking for first homes or for homes with more room in different surroundings.