Thursday 22 April 2021
“Be on your toes and move quickly”, was the message from Rightmove as they revealed that we are now in the midst of the fastest-selling market since their records began.
During March, time on the website surpassed a whopping 2bn minutes in a month for the first time and they have already recorded 20 of its busiest days ever in terms of visits to the site.
Additionally, average house prices also broke records, with data revealing that the national average price of property coming to market hit a new all-time high of £327,797, following a 2.1% (+£6,733) monthly jump which is £4,000 higher than the previous record hit in October 2020!
Tim Bannister, Rightmove’s Director of Property Data, commented: “This is only the second time over the past five years that prices have increased by over 2% in a month, so it’s a big jump, especially bearing in mind that the lockdown restrictions are still limiting the population’s movements and activities.”
But what is causing this huge demand?
The major drivers for the current rise in house prices are down to a number of factors.
In late 2019 there was huge pent-up demand, but with the closure of the economy due to lockdown this only increased the demand further.
Additionally, the historically low-interest rates have made homes more affordable to many and the more people that can afford a home the more demand there will be. The weaker pound has been a further factor in stimulating activity, particularly in London, in the more exclusive markets even though it hasn’t made a notable impact on the index at this stage.
Although not the case for everyone, those still in work during lockdown have accumulated savings that they wouldn’t otherwise have had. With a large chunk of cash available, many are thinking of putting this into property – whether it be improving their home, moving to a bigger home based on lockdown lifestyle changes or starting their property investment journey and buying an investment property.
Finally, the temporary stamp duty holiday was a major boost and driver to those looking for property.
Is it going to stay?
For now, we think certainly and here’s why…
A new scheme from the government to help buyers through 5% deposits went live on Monday 19th April. The scheme, which was first announced in the most recent Budget, will provide 5% of the deposit for the purchase of homes worth up to £600,000. In a statement, the government said that it would provide an “affordable route to home ownership for aspiring homeowners”. The market is likely to receive a further boost with the government’s new Mortgage Guarantee scheme and will in turn likely increase property prices, making property even more unaffordable as demand continues to outstrip supply.
Interest rates are set to fall further, making it more at reach for people to get onto the property ladder, thus increasing demand further and subsequently also increasing property prices.
In addition, optimism is growing due to the vaccination roll-out. This in turn means that this spring’s buyers are facing the highest ever property prices, with properties selling faster in the first two weeks of April than ever previously recorded – one in four properties that had a sale agreed in March had been on the market for less than a week! This is also the highest rate ever recorded.
A common theme here, and what has been the case for a while is that supply is too low to keep up with the demand. Rightmove figures show that despite an encouraging 145,000 properties coming to market during March, it was still not enough to meet buyer demand. Sales agreed were up by 55% on same period two years ago, reducing the stock of properties that are available to buy to the lowest proportion ever recorded.
Throughout everything this country, and the world, has been through during the pandemic, this level of sustained price growth underlines how well the property market continues to perform in comparison to other areas of the economy. What you can see here currently is the perfect storm for property prices and buyer demand to carry on increasing dramatically.