Demand is outstripping supply
House prices rose by 0.7% in February, according to Nationwide. This more than counteracted January’s -0.3% fall. We expect modest value growth to continue this year as demand remains high and, as the Budget on Wednesday showed, Government remains committed to supporting the housing market. Two key measures confirmed will support continued price growth and high activity levels.
The big announcement for the housing market was a widely trailed extension to the SDLT holiday. Purchases up to £500,000 will remain exempt until June, while those up to £250,000 will pay no SDLT until the end of September, when the thresholds return to pre-pandemic levels. This will be a relief for buyers struggling to hit the previous March deadline, but is likely to create similar anxiety for those hoping to meet the new June and September cut-offs.
The second major announcement was a guarantee scheme for lenders offering 95% mortgages. The details look very similar to the Help to Buy Mortgage Guarantee scheme which ran between 2013 and 2017, and probably gave a small boost to higher loan to value lending. The new scheme may have a similar impact, but is unlikely to dramatically alter the shape of the mortgage market, which has been dominated by lower LTV mortgages since the Global Financial Crisis.
Activity levels picked up over February, as the slow start to 2021 reported in the January RICS survey and observed in weekly activity data from TwentyCi has not lasted. Numbers of sales agreed and instructions to sell both increased towards the end of January and stayed high during February. Demand has been consistently stronger than supply, supporting price growth. Surveyors reported that new buyer enquiries were increasing more than new instructions to sell in January. And TwentyCi data shows more sales agreed than new instructions to sell since the start of the year.
We at Wilsons can certainly vouch for this report advising that demand has been consistently stronger than supply. Our stock of available home for sale has never been lower – nearly every property that comes onto our register this spring finds a buyer within days.