The stamp duty holiday might now be over, but UK house prices are continuing to rise due to a lack of homes coming on to the market.
New data from the Land Registry shows prices are rising by nearly 12% year-on-year, as buyers compete for properties.
Here, Which? explains what’s happening to house prices and provides advice on making an offer on a property in these uncertain times.
- Keep up to date on the latest coronavirus news and advice with Which?
What’s happening to the property market?
Since last July, the UK property market has been on the rise, led by the government temporarily cutting stamp duty.
The biggest savings of up to £15,000 ended on 30 June, but buyers in England and Northern Ireland were able to save up to £2,500 if they bought a home before the end of September.
Transaction numbers peak around stamp duty deadlines
The number of houses being sold rose significantly during the tax holiday, with peaks in June and September as buyers sought to get transactions over the line in time to save on tax.
Provisional data from HM Revenue and Customs (HMRC) shows that just 76,930 sales went through in October, less than half the number recorded in September.
The graph below shows the number of sales registered each month since the start of 2020.
How have house prices changed?
We’re getting a clearer picture of the impact that coronavirus has had on house prices, but continued uncertainty over what will happen next with the pandemic means figures could continue to fluctuate.
The most reliable barometer of house prices is the Land Registry’s UK House Price Index, which is based on sold property prices. It works on a two-month lag, so the latest available figures are for August.
The Land Registry says that the average price of a property in the UK rose by 11.8% year-on-year in September to reach £269,945, as shown in the graph below.
Rightmove’s house price index is more up to date, but it’s based on asking prices rather than sold prices. In November’s report, it found that average asking prices fell by 0.6% month-on-month but rose by 6.3% year-on-year.
Nationwide’s index (based on mortgage lending) reported a 0.7% monthly and 9.9% annual rise in prices in October. Halifax’s index (also based on lending) reported a 0.9% monthly and 8.1% annual increase.
- Find out more: should you pay attention to house price indices?
What will happen in the coming months?
There’s been a great deal of optimism around the property market of late, with an imbalance between supply and demand meaning properties are selling more quickly than before.
Research by Rightmove found the average time to agree a sale in October was 36 days, the joint-lowest figure registered since the start of the pandemic.
Lack of supply will keep prices high
The recent rise in demand from buyers hasn’t been met by a flurry of new properties coming on to the market, and this imbalance could keep prices high. The estate agency Savills predicts prices will rise by 3.5% in 2022 and 3% in 2023.
Nathan Emerson of the estate agency group Propertymark says: ‘The market has continued to see an imbalance of supply and demand, with our most recent housing report revealing an average of 19 buyers for every available property on the market.
‘We remain in a strong seller’s market, which will impact house prices as buyers bid to secure their dream home despite the end of the stamp duty holiday. Interest rates also remain low, which helps with the short-term affordability of higher purchase prices.
‘Lifestyle changes are still prevalent, and buyers are now looking to a future which is very different from the one they envisioned two years ago. The search for green space, home offices and more flexible living is a trend that is unlikely to diminish before the new year.’
How do house viewings work at the minute?
During last year’s lockdown, estate agents began offering video house viewings, and these are continuing to play a part despite the recent lifting of restrictions.
The government’s latest guidance recommends that buyers ‘take advantage of any opportunities to view homes remotely before committing to view in person.’
If you then a house in person, you may find that the estate agent requests you wear a mask and sanitise your hands when entering the property.
- Find out more: should you buy or rent a home based on a video viewing?
Is it possible to get a good mortgage deal?
Since the pandemic began, the number of mortgage deals on the market has fallen dramatically, but there are now plenty of good rates out there – especially if you have a bigger deposit.
Many banks now offering mortgages with rates below 1%, but the cheapest deals are beginning to become more expensive after hitting historic lows last month. This uptick comes amid rumours that the Bank of England could soon increase the base rate.
Buyers with deposits of 5% and 10% have been hardest hit by deals being withdrawn, though first-time buyers have been handed a boost by the new 95% mortgage guarantee scheme, which launched in April.
Buyers locking in low mortgage rates
David Hollingworth of L&C mortgages says: ‘Fierce competition in the mortgage market has resulted in rates being driven down to new, historic lows.
‘The supply of property coming on to the market remains low and that combined with ongoing buyer demand will no doubt hold house prices up.
‘This will be supported by the low mortgage rates, as borrowers will be able to fix their rate in order to protect against any future fluctuation and shore up against the potential of rising costs elsewhere.’
Which? Money Podcast: is now a good time to buy a house?
In a recent episode of the Which? Money Podcast, we discussed whether now is a good time to move home, with insight from experts from Knight Frank, Nationwide and Zoopla.
You can listen to the full episode below.
Which? coronavirus advice
Experts from across Which? have been compiling the advice you need to stay safe, and to make sure you’re not left out of pocket.
Keep up to date on the latest coronavirus news and advice with Which?.
This story was originally published in March 2020. It is regularly updated with the latest figures from various leading house price indices. The last update was on 23 November 2021.