Estate agent Hamptons says that summer 2021 marked peak growth in the housing market although the race for space continues. Properties with bigger gardens and more room for working from home have been prioritized by many homebuyers.
With values set to rise by up to 3.5% a year between 2022 and 2024, the second wave of demand for more space will keep driving house prices across Great Britain higher, a forecast claims.
After a record surge in activity this year as families sought larger homes after the pandemic, the estate agent Hamptons also predicted that more homes will be sold in 2021 than in any year since 2007.
In addition to believing that summer 2021 marked “peak house price growth”, Hampton expects growth to slow over the next few months so that this year would end with average prices in Great Britain 4.5% higher than at the end of 2021.
However, a “race for space”, one of the factors widely credited with contributing to the stronger-than-expected price growth during the pandemic, which has seen many buyers prioritizing properties with bigger gardens and more room for working from home, could be set to continue for some time.
Both official house price figures and data from some commentators indicated that the market had cooled after the partial end of the stamp duty holiday in England and Northern Ireland this summer.
The most recent data acquired from the Office for National Statistics showed that the average UK house price fell by £10,000 in July compared to a month earlier. However, its figures showed that annual price growth was still running at 8%. Before a key stamp duty holiday deadline on June 30, many homebuyers had rushed to complete their purchases, and official data showed that sales tumbled by almost two-thirds in July.
Some more recent data has suggested that the market is continuing to boom, even though the threshold at which stamp duty begins returns to its pre-pandemic level of £125,000 on 1 October.
One of the country’s biggest mortgage lenders, the Halifax, said this month that the average cost of a property escalated by 0.7% in August; while its rival lender, Nationwide, put the monthly rise in August at 2.1%, the second-highest in 15 years.
According to Hamptons, flexible and remote working and other Covid-induced changes mean households will move home more often than during pre-pandemic times. It is predicting price growth for Great Britain of 3.5% in 2022, 3% in 2023, and then 2.5% in 2024. That would mean a rise of 13.5% between the start of 2021 and the end of 2024.
The State Agency predicts:
“With property values notching up about 6.5% this year and then between 4% and 6% a year between 2022 and 2024, northeast England would be the top performer over the period.”
Hamptons said that by comparison, London was set to underperform the rest of the country over the next couple of years, with prices forecast to rise by 1.5% this year and 1% in 2022.
Several surveys have found that many households were prompted to quit the capital or consider doing so by the stretched affordability and the rise of flexible working.
To prevent a collapse in the market during the first Covid lockdown, the government announced a stamp duty holiday in July 2021. Up until June 30, 2021, the first £500,000 spent on a property in England and Northern Ireland was tax-free, which meant saving for a buyer of up to £15,000.
On July 1, the tax break was cut down, with the threshold at which the tax on property purchases begins falling to £250,000, and this so-called “nil rate band” will return to £125,000 next month. The tax break has already ended in Wales and Scotland.
Separately, estate agent Knight Frank said restrictions on overseas travel had left many people looking for somewhere they could retreat to, away from the city bustle, causing the boom in demand for second homes.
The boom started after the first lockdown in 2021 was implemented. Its data showed that second home purchases outside London increased by 83% in the first eight months of 2021 compared with the five-year average, according to Knight Frank.