End of Government support likely to take heat out of housing market
Analysis of the latest House Price Index published for April shows the beginning of signs that the housing market could be at risk of overheating.
Among those signs are the lack of available properties, rising prices, and high demand. However, the economic measures introduced by the Government to protect the housing market are likely to have a cooling effect when they end later in 2021.
Commenting on the House Price Index for April, Robert Burdett, MD at James Leigh Property Management said:
“The market is showing some of the classic warning signs of overheating, which is something that as an industry we must avoid. However, when Government support ends in the Summer, that is likely to have a cooling effect.”
Continuing, Mr. Burdett said:
“It’s not often that the removal of Government support is positive, but in this case, the end of measures put in place to bolster the housing market through Covid will have the necessary positive effect.”
The impact will be felt when the Stamp Duty holiday ends, along with furlough. The housing market is expected to slow, but with the Bank of England forecasting strong economic recovery from the Covid pandemic, any slowdown is likely to be short-lived.
There is also some anecdotal evidence showing that many potential sellers are waiting for their second Covid vaccine, and for restrictions to ease as the pandemic continues to slow across the UK. That means that there is likely to be an increase in available properties, which will naturally slow house price increases as buyers have more choice and selling prices calm somewhat. The housing market is unlikely to become a buyers’ market, but it will begin to rebalance.
Alongside this is the changing nature of the type of properties that people are looking to buy. Demand for properties in rural areas with more space and facilities for people to work from home is high at present, but whether this trend continues will depend on whether businesses wish to see their staff return to the office permanently, a blend of homeworking and office, or remain at home.
Robert Burdett said:
” The housing market finds itself in a unique position. Not only has it ridden the Covid storm beyond all expectations, but the changing nature of people’s housing demands means that purchasing patterns could change and shift as people look for more space, rural locations, home office space, and high-speed broadband to work from home.”
Whatever change and challenges the UK faces in the coming months, we expect the housing market to remain resilient, with steady growth into 2022.
To read the full April House Price Index analysis from James Leigh Property Management visit https://essexpropertyblog.co.uk/2021/05/04/house-price-index-records-performance-for-april/