This week saw the release of the latest Hometrack House Price Index Report and our Director, Tobi, talks through it and the current market in the video below which you can see by clicking here.
Now, let’s take a look at all the headlines that caught our attention this week. I always try to summarise the links to save you having to click through.
- Nearly 50,000 New Homes Built in First 3 Months of 2021 – The latest housing figures suggest that the number of houses being built is continuing to grow after measures were put in place by the UK government to support the industry throughout the pandemic. The first quarter of 2021 saw 49,470 homes built to completion, a figure not matched in over 20 years. In the same time frame, construction began on a further 46,010 homes across the UK. These figures work well to demonstrate the amazing ability of the housing and construction industry to recover during these unprecedented times. A critical factor in this has been the government’s commitment to keeping building sites open throughout the pandemic. By allowing flexibility of construction site working hours for builders and extending planning permissions, the government has done its part to keep these important industries functional and even thriving. Echoing this sentiment, Housing Secretary Robert Jenrick commented that this move has been crucial in delivering “the homes this country needs as we build back better from the pandemic.” The government has also invested a hefty £20 billion in affordable new housing in the UK, focusing on areas of highest demand and necessity, which is another powerful step toward minimising the economic impact of the recent crisis. For those who are on the property ladder or looking to enter it, the government introduced several new schemes and incentives to help those who otherwise would struggle to own their own home. With the 95% mortgage guarantee scheme and ‘First Homes’ to help local buyers, many are actually closer than ever to realising their property goals.
- Has the Pandemic Killed Off the London Property Market? – It would be impossible to measure the impact the covid pandemic has had on life in the UK, both on a personal scale and nationwide. It was a shockwave that sent ripples into every aspect of life as we know it and the true impact of both the virus itself and the lockdown measures used to contain it still won’t be known for many years. One surprising effect was how quickly people began trying to move out of cities, with London being hit particularly hard. Last year, 39% of residents were reported to be looking to move elsewhere. This statistic is shocking enough, but the number of home-movers attempting to exit London has now hit a mind-blowing 52%, knocking London off its top position as the ‘most searched for place to live’ in the UK. The pandemic effected a huge shift in priorities for many people, as London’s limited space and steep cost of living have come into conflict with people who increasingly desire more affordable housing with private gardens and outdoor open spaces. The move to home-working for many has undoubtedly pushed this shift, as London residents realise that they no longer need to live in the city in order to work for city businesses. However, there is still plenty of hope for the recovery of the London property market. Overseas investors are currently very keen to fill the gap, with no sign that their interest in this historic and cultural hub is slowing. All being said, the question remains; will our capital ever be likely to get back to the glory days before the pandemic? Only time will tell.
Chancellor Rishi Sunak to tap pensions for UK’s growth fund in a plan to help boost economy – The Mail on Sunday has reported that Treasury officials have met with senior figures in the pensions industry recently. Together they discussed a controversial scheme that would inject £2.2trillion in retirement pots into a variety of businesses, transport projects, property and other carbon-friendly investments. This scheme is called the Long Term Asset Fund and the reason for its controversy is clear; sources have suggested that workplace pension funds may invest a percentage of employees’ savings into the new fund by placing the scheme as the ‘default’ pension option. This potentially means that billions of pounds will be automatically channelled into the fund without the full knowledge and consent of its donors.
This means that, though technically able to opt-out, the majority of workers would contribute unwittingly without knowing fully where their contributions are going. Though pension fund bosses appear to support this plan, influential critics such as the Investment Association are concerned that pension savers may be coerced into investments that are difficult to sell. They have issued a warning to pension-savers that they must ‘understand that they are making a long-term commitment to invest’ and that ‘they may not be able to get their money back quickly.’
Annual UK house prices surged 13.4% in June – This article mainly caught out attention as they quoted me when I said, “The housing market is like the Wild West at the moment – and properties are flying off the shelves whether they’re good, bad or ugly. A scarcity of properties and the stamp duty holiday has created a situation where buyers feel like they’re in the last chance saloon, creating panic buying and pushing up asking prices.” But it also caught attention because of the positive headline and reporting related to house price growth. The Nationwide Building Society has revealed that in June the average UK house price reached £245,432, which was an increase of 13.4% from the same month last year. This was likely influenced by home-buyers and investors taking advantage of the full stamp duty holiday before it began to draw to a close at the end of June. Regional data shows the same trend, with all areas of the UK experiencing a rise in annual house price growth in the three months preceding June. Several factors have played a part in boosting the market, such as the SDLT holiday which came as a welcome relief for those looking to enter the market or increase their portfolios. Changing needs due to lockdown meant a focus shift onto more spacious homes in less populated areas for many people. The new mortgage guarantee scheme has also encouraged people with only a 5% deposit to get on the property ladder for the first time. Nationwide’s chief economist has told us that the market is expected to slow in line with the end of the stamp duty holiday. However, with the beneficial scheme having a staggered ending until September 30th, it is likely that the market’s current upward trend will last for some time yet.
That is all we have for you this week. If you have any comments or questions on this week’s news summary then please feel free to send us an email at [email protected] – if not, see you next week.