The latest market indicators and analysis reveal a combination of high demand, low-interest rates, increased mortgage approvals, and economic government support is set to prevent price drops in the UK housing market, typically experienced during recessions. This exceptional situation has prompted global real estate services provider, Savills, to revise upwards the five-year growth projections that were made in the immediate aftermath of the Coronavirus lockdown.
In its revised forecasts for 2020-2024, the average price growth across UK housing will be 20.4 per cent (upgraded from 15.1 per cent), with London’s expected price growth upgraded from 4.4 per cent to 12.1 per cent. Given the high volume of deals agreed this year, giving rise to a 4 per cent average price growth increase across the UK housing, transactional volumes are being buoyed by the stamp duty holiday as well as the government’s recently announced Winter Economic Plan. The job support programme, which underpins the plan, is set to replace the furlough scheme and run for six months.
In addition to this government subsidy of wages, the Job Retention Bonus has also been announced. Moreover, from a mortgage affordability perspective, lacklustre income growth is likely to be offset. Oxford Economics incorporates Bank of England data to determine forecasts for interest rates to remain at 0.10 per cent through 2023, rising to just 0.25 per cent in 2024, with unemployment falling from 6.5 per cent this year to 3.6 per cent by the end of the forecast period.
The market is gathering momentum with buyers willing to pay over the odds to secure premium properties. Data from NAEA Propertymark’s August Housing Report reveals that 13 per cent of properties sold for more than the original asking price in August – the highest recorded since November 2015. Further, the average number of sales agreed per estate agent branch was the highest figure (12) for August since 2007.
“While we clearly can’t ignore the economic backdrop, other factors, including a stamp duty holiday, have unleashed an unexpected wave of activity in the market and added to the pent up demand coming out of lockdown,” said Lucian Cook, Savills head of residential research.