How Coronavirus is affecting house prices

The UK property market has seen a boom in sales since reopening after the national lockdown. However, doubts remain over whether house prices will continue to rise when the stamp duty cuts end next April.

What is the property market like now?

England, Scotland, Wales and Northern Ireland have each opened their property markets, which means that estate agents are now able to carry out in-person house viewings. Potential buyers are now able to move home, even in England, where there are new national lockdown restrictions in place.

The recent rise in the UK property market has been due to the Government’s decisions to cut stamp duty costs temporarily. The stamp duty cuts vary in different countries, but overall these cuts are believed to save home buyers up to £15,000 in tax if they move home before April 2021.

We have already witnessed the impact coronavirus has had on house prices. Still, with the ongoing stamp duty holiday and the prospect of continuing lockdown measures, figures could fluctuate significantly in the coming months. 

Nationwide’s index (based on mortgage lending) reported a 0.8% monthly and 5.8% annual rise in prices in October, while Halifax (also based on lending) reported a 0.3% monthly and 7.5% yearly increase.

What is the prediction for the property market?

There is some optimism for the UK property market at the moment, with Rightmove saying the average time to agree a sale fell to just 50 days in September. It is possible that the market (and house price growth) could slow down once the Government’s coronavirus financial support schemes and the stamp duty cut come to an end. The Centre for Economics and Business Research (CEBR) predicts house prices could fall by 14% in 2021.

Have I left it too late for the stamp duty cut?

The stamp duty cut has placed a huge strain on estate agents, house surveyors and conveyancers. The increased demand has caused house moves to slow down significantly, with reports of mortgage valuations taking weeks to come through and legal work being caught in a log jam. 

Many official trade bodies across the property sector have written to Rishi Sunak to extend the stamp duty break by at least six months to help them cope with demand and ensure deals go through. It will take some time before we have an idea if the extension is granted, so if you’re looking to buy a home before the stamp duty holiday ends next March, the clock is ticking.

Is it possible to get a good mortgage deal?

 Since the COVID-19 pandemic began, the number of mortgage deals on the market has halved, but there are still plenty of good rates out there – especially if you have a bigger deposit. Mortgage rates are on the rise as lenders look to protect themselves against the risk of defaults during such an uncertain time. Homebuyers with the smallest deposits have been most heavily affected by the cuts, with 90% and 95% mortgages disappearing almost entirely.

Recent data from Moneyfacts shows a total of 2,774 mortgages are now on the market, compared with 5,733 in March.

The Government has also pledged to unlock millions of 95% mortgages for first-time buyers, but it may be some time before these plans come to fruition.

Need advice?

Mortgage brokers are legally required to work in your best interest — not in the interest of the bank or lender. At Cornerstone Finance, we will work with you to understand your goals and your financial situation, to provide the best product to meet your needs. For advice on your mortgage, contact us today.