The Impact On The Housing Market Due To COVID-19

The housing market saw a decrease in house purchases as the pandemic restrictions took full effect in April and May last year. 

Lenders started to implement a firm risk-based approach to lending, with most lenders restricting lending to a maximum Loan to Value. This change to policy had a detrimental effect amongst a lot of buyers, particularly those with deposits of 10% or less. As a result, this meant a lot of first-time buyers were not able to borrow the required mortgage to buy their first home. The positive news is that most lenders have now revisited criteria to facilitate lending for deposits as low as 10%. However, according to HSBC tighter lending criteria could remain in place into 2022. 

There is optimism around the property market, with Rightmove stating the average time to agree a sale is just 52 days in November, compared to 67 days a year earlier. Zoopla predicts annual house price growth will reach 5% in February, before slowing to 1% by the end of 2021. Halifax believe house prices will fall by between 2 – 5% this year, whilst estate agents such as Savills and Hamptons both anticipate house prices will stay the same. According to the property platform WiggyWam, estate agents in the UK have more than 582,000 properties in their pipeline.

The Land Registry states the price of a property in the UK has increased by 1.2% month on month. In addition, provisional data from HMRC shows 129,400 property sales completed in December 2020, which is an increase of 31.5% when compared to the previous year. 

An overall picture of the housing market will not be entirely clear until after the impending finalisation of Brexit, lifting of the current lockdown and after the stamp duty holiday comes to an end on the 31st of March this year. A lot of buyers have and are still taking advantage of the holiday despite the ongoing pandemic, with nearly 9 out of 10 people buying a main home in 2020 not paying any stamp duty at all. There have been complaints from the public that the stamp duty holiday was deployed too early and that it should be extended, however the Government have stated they intend to end the holiday when planned.  

In November it was noted that UK lenders approved more than 100,000 mortgages, the most in over 13 years. The latest Halifax House Price Index revealed that in December 2020 house prices had continued to increase. In addition, Nationwide building society released figures that showed house prices had increased by 7.3%. The increase can be attributed to the stamp duty holiday, which expires in March 2021. 

If you are seeking advice for a mortgage, please contact one of our experienced mortgage consultants for more information.