The Real Estate Summer Lull is Replaced by a Surge in Sales
This year the UK housing market saw its busiest month in the past 10 years. Usually, around this time, real estate sales are the lowest for the entire year. However, the global pandemic and built up energy during lock-down created a surge of interest among people for purchasing new properties. With this event, the traditional rule book for the housing market was torn to shreds.
To be more precise sales were up 38% in comparison to the same period last year. This increase is worth more than £37bn. Besides the increase in sales, we can also notice an increase in the number of sellers. Ever since 2008, we did not see such an increase in new sellers on the market.
Two main factors contribute to this historical increase in the UK housing market.
One of the main reasons is the fact that the global pandemic brought a stop to real estate sales, for obvious reasons. This delay in people’s plans must have created a form of tension and people are now beginning to went, so to speak. That is, they delayed their plans to move and now the opportunity is on the table so everyone started buying at once.
Besides the influence of the lock-down the stamp duty holiday introduced, by the government, last month also influenced the surge in property demands. The tax cut is intended for the property that is up to £500.000 in England, and £250,000 in Wales and Scotland. The largest UK real estate firm, Countrywide, saw the biggest increase in demand for houses between £500,000 and £750,000.
The entire situation is made additionally interesting with the fact that people’s housing preferences also changed. This is mostly because of the influence the lock-down had on their needs and wishes. With all that time to reconsider life decisions, many of us made significant changes in our plans. Most people are more interested in a property that is outside large urban areas and situated more in the countryside. Because of the trend, we can expect a change in prices we are used to. For instance, countryside property may increase and city dwellings may decrease in their price. However, this remains an undetermined trend and it may be just linked with the pandemic and the experience of being in lock-down.
In addition to the shift in the real estate market, there was an increase in work for mortgage lenders. Since so many people are applying for loans there are not enough people to process all the paperwork that is required. This is creating a stall in regular business among the money lenders. But as they get on top of the new work the waiting time for mortgages will reduce to its normal frequency.
All in all, this July was a trailblazer in many respects and as we move forward, we will see if the trend continues. Certainly, this will bring much-needed cash to the economy as the money starts passing hands once more, as it did before the outbreak. But we must not forget that this sudden outburst of activity in the real estate sector is inspired by recent events. We can then also expect the situation to completely change again if the second wave of infections strikes the planet. The current situation is optimistic but we should not get our hopes up too soon.