How is the housing market progressing during Covid-19?

Paul Williamson of Begbies Traynor shares his insights on the housing market during the Coronavirus pandemic, and what we can expect going forward.

As house hunters supercharge their search for new residential property, determined to take advantage of the reduced Stamp Duty Land Tax (SDLT) rates before 31 March 2021, first-time buyers experience unprecedented market competition from more experienced buyers looking to secure a quick sale.

The temporary stamp duty ruling is drawing custom to the housing market, reducing the likelihood of the sector falling into a trading slump.  Current stamp duty rules pose no SDLT on house purchases below £500,000, resulting in thousands of pounds worth of tax saving for homeowners.

Are house buyers well placed to purchase during Covid-19?

As the economy continues to ride uncertain waters, mortgage lenders withdraw high loan-to-value (LTV) products to the dismay of first-time buyers. According to the latest Zoopla House Price Index, the share of first-time buyers purchasing homes has dropped for the first time in five years. As demand from first time buyers is set to reduce further as we enter 2021, existing homeowners are likely to overtake this demographic for the first time since 2017.

As house prices mirror the release in pent-up demand, buyers flock following the reopening of the housing market, resulting in demand to soar at the fastest rate since 2016, according to Nationwide. As momentum around house sales continues following the shutdown of the market during peak lockdown and the SDLT reduction, the housing market is experiencing steady growth. On the other hand, FTBs with smaller deposits are forced to raise more funds before approaching the bank or put their housing plans on hold until lenders recover the confidence to reintroduce high LTV products. Job certainty and unexpected drops in income remain on the agenda for workforces, as once strong performing and viable businesses now battle the prospect of company liquidation.

As house prices continue to soar, leading mortgage lenders withdraw key products and unviable jobs face the threat of redundancy following the closure of the Coronavirus Job Retention Scheme (CJRS). Selected demographics and regions are benefitting more than the other from the rapidly changing nature of the housing market, however, the market has made great strides since the trading standstill in March 2020.