Is the ease in lockdown restrictions just the tonic the property market ordered? On the face of it, it looks like the answer is a resounding yes. At the time of writing, new vendors have surged to 67% above the April average, 242% higher than during lockdown last year and 56% up on 2019.
But is something else at play? Could the sudden swell in transactions be down to the UK government’s extension of the stamp duty land tax (SDLT) holiday? Or, is it down to a very auspicious combination of the two?
Things are beginning to feel like something approaching ‘normal’, aren’t they? Whether it’s being able to see your family after months apart, engaging in some retail therapy, or just the simple pleasure of a swift pint at your local, many of the little things we call ‘everyday life’ are on their way back.
The same appears to be true for the property market. According to the latest data from the Yomdel Property Sentiment Tracker, the week directly after the Easter break saw a glut of new vendors pile into the market in anticipation of the ease in lockdown restrictions across the UK.
Online activity has been unusually high, with Yomdel recording the numbers of people visiting estate agents websites at 184% higher than the second week of lockdown in 2020, and 34% higher than the equivalent week in 2019. At the same time, new vendor enquiries leapt up some 40% and buyer enquiries rose 17% to their highest level since late July last year.
The simple explanation for these numbers is that after biding their time through months of uncertainty, both buyer and seller confidence is returning to the market. People feel safe not only visiting properties or allowing prospective buyers into their home but also in starting the lengthy process of a housing transaction.
However, the property market is rarely simple and there’s another factor we need to consider.
Last month saw a bout of ‘March madness’ as many homebuyers desperately scrambled to meet the SDLT holiday deadline on March 31st. Data released by HMRC last week reveals that
March 2021 had more than double the number of transactions of the same time last year for England, and almost the same for Wales.
In England, transaction figures hit 155,080, compared to the 74,490 in March 2020. For Wales, the total for March reached 8,170, close to double the figure for 2020.
We’re yet to see figures for April, but we’ll likely see more of the same. Chancellor Rishi Sunak has extended the stamp duty holiday until the end of June 2021, with plans to taper its eventual wind down until the end of September. Many vendors and homebuyers who would have put transactions on ice for fear of missing the March deadline are now likely to pick up where they left off, potentially driving figures higher still throughout April and May.
A combination of the two?
So which is it? Is the property market’s current purple patch being driven by the SDLT holiday or easing restrictions?
The truth is, it’s probably a little of both. The SDLT holiday has undoubtedly turbocharged the market as buyers clamour for the best possible deal. However, none of this would have been possible if people didn’t feel safe, both financially and physically, engaging in a transaction.
It’s probably best to see the current moment in the conveyancing industry as something of a perfect storm. Two equally important factors have coalesced at just the right time to create very favourable market conditions.
But like any storm, present trends do have the power to be destructive…
A note of caution
For all the optimism about the market, it wouldn’t be this blog if we didn’t conclude on a cautious note. And unfortunately, there are a few things to be cautious about.
First, is what happens when the SDLT holiday does finally come to an end. From late May onwards, transaction volumes could begin to dwindle as the impact of the holiday on demand slows. Current activity is predominantly driven by buyers with high levels of housing equity, most of whom will have taken advantage of the SDLT holiday by the end of May.
Meanwhile, for the average buyer, and those just entering the market, June will come far too soon for them to take advantage of the higher threshold. This could lead to many buyers holding fire on making a purchase. Add to this that the UK has a chronic shortage of housing stock and ongoing uncertainty caused by the pandemic, and it’s not hard to foresee a scenario in which the last few months’ activity turns out to be little more than a mini-bubble.
It’s to be hoped that what we’re seeing are the green shoots of a full-scale recovery. However, as long as economic uncertainty prevails it’s worth approaching even the most fantastic transaction figures with caution.