The UK's property market remained strong throughout spring of this year. In March, sales hit the highest monthly level since records began 16 years ago, then in April the Rightmove House Price Index reported the highest ever monthly price jump of 2.1% – beating last October's record spike by more than £4,000.
This is all the more remarkable when we cast our minds back to this time last year. In spring 2020, lockdown was in full swing, estate agents were shuttered and only a tiny number of very advanced property sales were going through. Certainly no-one could have suspected that we were headed for the extraordinary property boom that we've seen since the market reopened.
The post-COVID property boom continues
With the benefit of hindsight, it’s no wonder things took off when the first lockdown began to ease. The coronavirus crisis prompted many people to review their living arrangements and aspirations, while generous government stimulus measures like the stamp duty holiday also lit a fire under the housing market. Property completions were up 66% in March compared to the same month in 2019, as buyers raced to catch their often substantial tax discount.
Many commentators thought that sales would begin to taper off when the stamp duty holiday ended as originally scheduled on 31 March, but the government backed down at the last minute after it came under pressure from increasingly vocal homebuyers worried about missing out through conveyancing delays. The deadline was extended until 30 June, and a reduced discount will remain in place until the end of September.
With that in mind, it's no surprise that sales figures remained strong for March, and it's possible that these trends could continue a while longer. Many sales that were agreed even before the extension was announced have been held up by a bottleneck in conveyancing and other professional services, and surveyors and solicitors have still got significant backlogs to work through.
What's more, it seems like the current price rises are no longer being prompted by the government’s tax discounts, but by strong buyer demand for properties set against limited supply. People who want to secure a property are finding they have to pay top dollar for it, and there’s less temptation to chance a cheeky offer when you know there are almost certainly other buyers waiting in the wings.
How long can this go on?
While all this is good news for vendors, property professionals and the army of plumbers, kitchen fitters and bathroom salesmen who get called in each time a property changes hands, one group who will not be pleased are first-time buyers.
House prices in England at the end of February were up a whopping 8.7% on last year. This represents the fastest house price growth in more than six years, and the Rightmove House Price Index for April reported that the average price stood at £327,797. With many people still on reduced incomes (especially in the younger age brackets), the prospect of getting on the property ladder is becoming increasingly remote for anyone not already on it.
How far this can continue is a tricky question. Many property insiders are expecting that house price growth will ease off a bit later in the year once the post-pandemic momentum to move is spent, though the general consensus is that the market will remain strong so long as supply and demand are out of sync. There’s also the question of what sorts of properties will be desirable as time goes on. During the past year, there’s been a general push towards larger properties in more suburban or rural locations, but as offices reopen and cities begin once more to become hubs for culture, dining and nightlife, it’s possible that urban living could start to get more desirable once more.