Activity in the UK housing market during the first few weeks of January often sets the tone for the whole year, though the 2021 outlook is somewhat muddied by the challenges of the pandemic and by the 31st March stamp duty holiday deadline. However, two main things stand out.

Firstly, sellers who have come to the market are continuing to price very competitively, with some perhaps still hoping to find a buyer and complete before the tax-saving cut-off, though the odds are now against them. Newly marketed property asking prices are down by an average of 0.9% (-£2,887) on the month.

Secondly, buyer activity has continued to exceed the same period a year ago, being buoyed by the post-election ‘Boris bounce’. That ‘Boris bounce’ ended abruptly with the first lockdown in March and the temporary closure of the housing market but was followed by a far stronger resurgence as people reassessed their housing needs and priorities following their experience of lockdown. With another long lockdown upon us, there are early signs that we are surpassing 2020’s new-year surge in activity, with the number of prospective buyers contacting agents between 2nd and 12th January up by 12% and sales agreed numbers up by 9% on the comparable period last year.

The latest Rightmove analysis shows that it is now taking 126 days from the time an offer is accepted until legal completion, just over four months. This means that new buyers in the market should not be factoring in any stamp duty savings, unless they are first-time buyers, who will still be mainly exempt after the March deadline has passed.

Of those already in the sales agreed pipeline, now at 613,000 in our latest count, Rightmove’s analysis projects that around 100,000 will miss out on their stamp duty saving. Seller flexibility to re-negotiate will be key to preventing some sales from falling through for this group.

However, it should also be remembered that the surge in buyer demand after the first lockdown in 2020 was initially driven by movers’ changed housing needs, and thus started a couple of months before the July introduction of the stamp duty holidays. The combination of the two resulted in an amazing recovery in 2020 activity despite the pandemic, with the number of sales agreed up by 10% compared to the whole of 2019.

House Price Index

North West:

Average House Price: £210,365

Monthly Change: -2.1%

Annual Change: 7.0%

Yorkshire and Humberside:

Average House Price: £202,608

Monthly Change: -2.2%

Annual Change 6.3%

West Midlands:

Average House Price: £244,233

Monthly Change: 0.6%

Annual Change: 6.1%

London:

Average House Price: £604,055

Monthly Change: -2.7%

Annual Change: -1.4%

 

Original Content take from Rightmove House Price Index – January 2021.

Annual UK house price inflation +3.9%

The annual rate of UK house price growth has moved higher to +3.9% in November up from +1.3% a year ago. The 3-month growth rate peaked at 2% in September and has slowed, suggesting annual growth will start to plateau at c.5% in 2021 Q1.

The impetus for house price growth is coming from northern England and Wales where affordability remains less of a barrier to price growth. Average prices in the North West are increasing at 5% and at a city level, Manchester is registering growth of 5.7% followed by Leeds, Nottingham and Liverpool all recording growth over 5% per annum.

Demand for housing 40% higher over 2020 than 2019

Market conditions remained strong as we approached the festive period; although demand has slowed since the summer yet remains 33% higher than a year ago when the General Election impacted levels of activity.

Over the whole of 2020 the demand for housing increased by 40% compared to 2019. The flow of new supply onto the market has been 4% higher than 2019 and this supply/demand mismatch explains why house price growth is increasing.

South of England leads the recovery in new sales

New sales agreed continue to run ahead of last year by over 40%, in line with above average demand. During 2020 9% more new sales agreed in 2020 compared to 2019. These sales will convert into completions after circa 3-4 months so a proportion of these new sales will not complete until 2021. The rebound in sales has been strongest in the South East and Eastern regions where they are more than 20% higher than 2019.

Value of sales agreed in 2020 is 26% higher than 2019

A combination of more sales at higher prices means the total value of residential property that has changed hands in 2020 is 26% higher than last year. This equates to an additional £62bn of sales which takes the annual total value to over £300bn.

This will significantly boost estate agency revenues and explains why the value of mortgage approvals for home purchase in October is 68% higher than a year ago (reflecting sales agreed 2-3 months prior, in the peak of the rebound).

Strong start to 2021 Q1

As households look to the future, and with no immediate end in sight to restrictions, a proportion will continue to re-assess their housing priorities.

Stamp duty is a factor supporting demand, but we have questioned the scale of the importance. A recent consumer survey by Zoopla found that 44% of movers’ plans were not influenced by the stamp duty holiday -they remain focused on the need to relocate and find more space and a better location.

We expect a seasonally strong start to 2021 with older, equity rich, long-time owning households continuing to take a growing share of sales. Improved availability of higher loan to value mortgages for those with deposits of 10% or more are already increasing which will support first time buyers in 2021.

House Price Index – Country, region and city summary

The latest House Price Index from November indicates that Manchester witness the highest annual house price growth at 5.7%, followed by Leeds at 5.6%, and Nottingham at 5.4% to round up the top three highest performing UK Cities. House prices in capital only increase by 2.8% YoY, with the average price of a house in London costing £485,100.

At a regional level, house prices in the North West have increased by 5% YoY, similar YoY growth was also witnessed in Yorkshire and Humber where house prices increase by 4.9%. The West Midlands including Birmingham had a YoY house price growth of 4.0% and the Greater London region house prices increased by 3.0% YoY.

Original content taken from Zoopla’s UK cities house price index report, November 2020

Rishi Sunak, the Chancellor of the Chequer, delivered his first Budget Statement to the House of Commons earlier this month, outlining proposals for changes to taxations and included forecasts for the UK Economy. During this announcement, he also made several pledges to support the housing market, which we have summarised and provided a brief overview below.

Stamp Duty Surcharge non-UK Residents:

It was confirmed that a new stamp duty surcharge of 2% for non-UK residents buying a property in England and Northern Ireland will be introduced from 1 April 2021. This new stamp duty surcharge was initially outlined the Conservative Party’s 2019 General Election Manifesto.

What does is stamp duty surcharge mean of non-UK residents?

Properties that exchange after the 11th March 2020 will be impacted by the 2% surcharge if the property is due for completion after April 2021. However, regardless of when the completion date may be, if you exchanged on the property before 11th March 2020, the current understanding is that the new additional 2% surcharge will not be applicable. The UK Government is still yet to provide further guidance regarding this additional surcharge.

 Grenfell Building Safety Fund:

The Chancellor also introduced a Grenfell building safety fund of almost £1bn, which will be used to remove ACM cladding from residential buildings taller than 18 metres. Further guidance regarding this is due to the published regarding how residents, leaseholders, or developers could access the funds etc.

 The Affordable Homes Programme and the Housing Infrastructure Fund

A £12.2billion extension to The Affordable Homes Programme which will now run until 2025, was also pledged by the Chancellor. This programme was initially introduced in 2016 and was scheduled to end in 2021. In addition to this, the Housing Infrastructure Fund will also be allocated an additional £1.1billion to build almost 70,000 new homes in high-demand areas.

The Treasury Green Book review

The Chancellor announced plans to review the rulebook that government uses to appraise and evaluate spending decisions. This could create a significant geographical change in the distribution of funds, which have previously been heavily directed towards London and the south/east regions of the UK. In future, public investment will be set to deliver wider economic, environmental and social benefits across the country as a whole.

All the above measures outlined by Rishi Sunak are aimed to provide support and restore confidence to the UK housing market. If you are looking to make some changes to your investment portfolio or would like to find out more about how the 2020 Budget announcement may affect you, please contact our team at reception@complete-ltd.com.

Has any Brexit uncertainty been removed?

The Conservatives are now enjoying a significant majority, 80 seats to be precise, Prime Minister Boris Johnson is now expected to be able to deliver Brexit on January 31.

The uncertainty over when and how the UK will leave the EU has caused the housing market to stall since the referendum back in 2016. Many people put moving decisions on hold until the outlook became clearer, however once Brexit is delivered, they are expected to return to the market. Not all of the uncertainty has been eliminated with this result, the UK still needs to negotiate a trade deal with the EU by the end of the transition period which is due to expire on 31st December 2020.

What does the is mean for foreign buyers?

As outlined in the Conservative manifesto, the party laid out plans to introduce a 3% stamp duty surcharge for overseas buyers, although it is not clear when this will be introduced.

The current expectations that Brexit may be finally delivered, has caused sterling to increase by 2% against the US Dollar. This has reversed some of the falls which were seen in the aftermath of the referendum, which had effectively meant UK property was selling at a discount to those whose wealth was held in other currencies.

Stamp duty reforms

Boris Johnson previously pledged reforms to stamp duty, which included increasing the threshold at which it kicks in to £500,000 and reducing the top rate to 7% from the current level of 12%. Yet, there was not any mention of stamp duty reform within the Conservative’s election manifesto, with the exception of the plan to increase the tax for overseas buyers.

We will have to wait until the new Government delivers it’s first Budget in February to find out whether the party will proceed with these proposals.

If you would like to find out more information about the services which Complete Prime Residential offers our clients, please complete the below contact form.

 

Complete Prime Residential Area Guide | Woolwich

Nestled on the south-eastern banks of the river Thames, Woolwich is perfectly placed to offer residents quick access to London’s wealth of opportunity without the hustle and bustle of city living. Recent regeneration initiatives have provided a new lease of life to this historic destination in south-east London.

History of Woolwich

Woolwich has a rich history which dates back to the Iron Age and it remained a relatively small settlement until beginning of the 16th century, when it began to develop into a maritime, military and industrial centre. Since this time Woolwich has been home to many maritime and military establishments including: Woolwich Dockyard, the Royal Arsenal, the Royal Military Academy, and the Royal Artillery Barracks.

Living in Woolwich

Woolwich’s large-scale regeneration scheme started back in 2003 with a focus around the area close to the Royal Artillery Quays. This was swiftly followed by the new town centre square which is overlooked by a futuristic development above a giant Tesco.

The population of Woolwich is fast approaching 65,000 with the average age of a Woolwich resident currently at around 31 years old. As you may expect from an area where the majority of residents are in their early to mid-30s, Woolwich has become a thriving commuter town.

Woolwich is embarking on a new chapter as the capital’s next landmark cultural destination. As of October 2018, the Royal Borough of Greenwich’s ambitious plans to create an arts destination in Woolwich’s Royal Arsenal moved a step closer. Planning permission was granted for the first phase of the multi-million pound restoration of the historic buildings, once complete it will create a 15,000sqm complex of theatres, dance studios and places to eat. This landmark destination for the arts is due to open in 2020, with many big-name tenants including, Punchdrunk the world-renowned theatre company, Chineke! Orchestra Europe’s first majority black and minority ethnic orchestra, Protein Dance and the Woolwich Print Fair, are all poised to make the Woolwich Creative District its home.

There are some excellent transport links which connects Woolwich with inner city London and major national rail services. London City Airport is short trip across the river Thames via the DLR for fat and convenient flights to other UK cities and major European cities.

The forthcoming Elizabeth Line (also known as Crossrail) service will further enhance the public transport offering for residents of Woolwich. Once introduced the Elizabeth Line will significantly reduce travel times into central London, with services taking just 8 minutes to reach Canary Wharf, 14 minutes to Liverpool Street, 21 minutes to Bond Street and about 50 minutes to get to Heathrow Airport.

Woolwich also has easy access to many greenspaces which includes Woolwich Common, and Woolwich Park. Greenwich Park, one of the largest single green spaces in south-east London is only a 15 minutes-drive from Woolwich.

Moving to Woolwich

Woolwich has maintained a lot of its architectural heritage while the recent regeneration in the area has generated interest in new and contemporary properties. Luxurious new developments have gone up and has brought an increase interest from people, who may not have initially thought about living in Woolwich.

Interested in moving to Woolwich? We can help, we have a number of schemes currently live in Woolwich town centre including The Regal and the soon to complete Wellington Quarter. Please contact a member of our London team on 020 3551 9900 to register your interest below. Alternatively, if you are looking to purchase or invest in a property in Woolwich, our partner company IP Global have a number of units available to buy including a selection of Help to Buy properties at Wellington Quarter, find out more information about Wellington Quarter here.

Register your interest for Wellington Quarter