UK Property Market Outlook: Week Beginning 2 November
Help to Buy and stamp duty holiday boost demand for new homes.
1 minute to read
That activity in the UK housing market has been remarkably strong since the easing of lockdown restrictions is not in doubt. Lenders approved 91,500 mortgages for house purchase in September, the highest number since September 2007, the Bank of England said last week.
Meanwhile, data from HMRC showed that the number of UK transactions in September was only 0.7% below the same month last year. That compares to an equivalent decline of -57% in April, demonstrating the extent to which activity has normalised, helped by a stamp duty holiday.
The new homes market is sharing in this recovery, with Knight Frank data pointing to a 60% jump in new applicant volumes in October this year compared with the same month the previous year and a 30% increase in offers made on new homes over the same period.
Demand has – like the wider market - been supported by the stamp duty holiday, but it has also received a further boost from the impending deadline for Help to Buy completions under the current criteria early next year.
Data from Molior for the third quarter of 2020 suggested that 30% of all new homes sales in London between July and September were via Help to Buy, up from 15% in Q2. Consequently, and in order to meet practical completion deadlines, demand has pivoted towards build complete developments.
Indeed, the data shows that the quantity of completed stock units available for sale across London has dropped for the first time since the end of 2014.
As we have noted previously, demand is likely to be sustained through to the early part of next year. Longer term, however, the strength of the economy will have the greatest bearing on the housing market recovery.