Recent reports suggest that the UK housing market is continuing to recover quickly after coronavirus restrictions on viewings were lifted. The Nationwide has released lending data which shows that UK house prices rose by 5% in September 2020, compared with figures from one year ago. There is also a 0.9% increase since August.
The Nationwide’s chief economist, Robert Gardner, identified a number of reasons for the growth. Firstly, there is a backlog of people who had already taken the decision to move before the lockdown, and are now pressing ahead with their plans.
Mr. Gardner also referenced the temporary stamp duty holiday, meaning there is no tax on the first £500,000 of all property sales in England and Northern Ireland until 31st March 2021, which is driving new purchases. Furthermore, many people have reassessed their lifestyles during lockdown, especially if commuting into a city is no longer necessary.
However, the growth in house prices is not necessarily good news for younger people and first-time buyers, who may feel squeezed out of the property market. Some measures to address this situation were announced at the Conservative Party conference in October.
Prime Minister Boris Johnson outlined plans to help young people get a long-term fixed-rate mortgage of up to 95%. He hopes that this will help up to two million extra people get on the property ladder. Commentators have pointed out that commercial banks will be unwilling to take risks at the moment, and the plan will undoubtedly need state backing.
The fine details of the reforms have yet to be announced, so it is too early to speculate how successful the scheme will be. If it allows more first-time buyers with modest deposits to purchase a home, then that is surely some good news worth celebrating in these difficult times.
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