Accumulate Capital reacts to Halifax House Price Index 2021
The Halifax Price Index report broadcast a new record high for the UK’s average house price as the property market experienced another uplift in March. Following this release, Accumulate Capital’s in-house analysts have responded to the surging property prices on the UK’s current market.
The national average house price increased by 1.1% in March compared to February 2021 and a 6.5% rise from the same time last year. Though the conclusion of 2020 through to the first month of 2021 marked a slower start to the year, the continued Stamp Duty holiday appears to have caused another uplift in housing transactions as we saw in the third and fourth quarters of 2020. With the imminent easing of restrictions enabling many to gradually achieve some relative normality, Accumulate Capital describes the UK’s economic market as a ‘coiled spring’ with significant pent-up potential energy. The extension to the Stamp Duty Land Tax holiday has many convinced that the property market is due another boom in the second and third quarters of 2021. The market remains receptive to government stimulus, a factor which is good news to property professionals and investors alike as the extended SDLT holiday causes another wave of conveyancing transactions and increased consumer confidence.
For this reason, prices are forecast to continue on an upward trend in April as new buyers enter the market to capture the financial benefits on offer from the higher threshold. The uplift in the volume of home purchasers may also be rising due to the consumers who have accumulated a wealth of savings throughout the various lockdowns and are deploying these on house deposits.
The surging volume of activity within the housing market has caused a backlog of transactions and presented challenges to the completion timeframe of many conveyancing deals. However, the flexible response from various real estate agents, property developers and other conveyancing professionals has commendably provided little to no hindrance on public demand nor transaction volume.
It seems that the annual house price increase of 6.5% is reflective of a thriving market due to two main reasons. The first of which is the increased affordability for many looking to purchase a second home, an investment opportunity or simply desiring a change in location. The tax reductions have provided buyers with a proportionately larger deposit budget and thus lending opportunities are simultaneously more affordable and more capable of securing a higher value asset. The second is the effect of the ongoing low interest rates. The impact of which may be felt in two distinct ways; the cost of borrowing is far more affordable, and the concept of holding money in a savings account that is unlikely to increase in value is less appealing.
The global trend towards an expanding ‘middle class’ has increased living standards and with the occurrence of multiple lockdowns the home once again became an integral part of quality of life. The market advantages are providing many with ability to trade up their homes and improve their living environment, for many this brief pause has presented ample opportunity to reassess their financial situation and make a move which is more aligned with their financial goals.
With the imminent easing of restrictions and the government’s new trading agreements firmly supporting an uplift in the economy, various market specialists are confident that the property market will continue to excel and outperform its other industry counterparts.