Chancellor injects even more positivity into the New Milton housing market
Since 2000, prices have increased by an average of £11,600 per year.
The lockdowns of the last year have focussed many of our minds on our homes. This has substantially boosted demand for housing, but until recently there were fears that the end of the stamp duty holiday in March 2021 would cause the housing market to grind to a halt, with transaction levels falling off a cliff. However, the Chancellor’s decision to extend the holiday, coupled with persisting high levels of buyer demand have boosted confidence significantly.
Confidence was given a further shot-in-the-arm with the announcement in the Budget that there would be additional support for buyers with low deposits; typically first-time buyers. When lenders fear that the value of homes they lend against will fall, they restrict the availability of low deposit mortgages to manage their own exposure. However from April new Government guarantees will enable lenders to offer 5% deposit mortgages with confidence, keeping the door open for fresh blood coming into the market at the entry level.
Rightmove, the property portal, has revealed that they are currently witnessing record buyer demand, as measured by visits to their portal. Likewise the latest Property Tracker survey from the Building Societies Association revealed a surge in consumer confidence in the housing market following the Budget. Over a third of people (37%) agree that it is currently a good time to buy a property in the UK, compared to 27% in December, with just 17% disagreeing that now is a good time to buy, down from 23% in December. There are also growing predictions that house prices will rise, with almost four in 10 people (39%) anticipating an increase over the next 12 months, a big jump from 25% three months ago.
While the market outlook is fantastic, it’s often best to always think about potential bumps in the road. The main concern at present is the prediction that unemployment will reach 6.5% this year. This would represent drag on the economy generally and the housing market specifically, albeit to a limited extent. When unemployment rises, we analysts start looking at repossession statistics and any other signs of weakening in demand. In the wider economy, there is also the spectre of inflation on the horizon which, if left unchecked, could force a rise in interest rates. However, while these dangers are always there in the background, none of them are cause for specific concern at this point in time.
The underlying fundamentals of the New Milton property market remain very much intact. The long run average rate of annual house price growth here is 8.7% per annum This means that since 2000, prices have increased by an average of £11,600 per year.
The outlook remains very rosy indeed across the country, not least in our neck-of-the-woods. Record low interest rates look set to continue, and this really is one of the most important parts of the economic backdrop necessary for a buoyant housing market. The recently refound love for our homes in general shows no sign of abating, bringing with it what rightmove calls ‘the greatest excess of demand over supply in the last ten years.’ The conditions are now excellent for anyone thinking about putting their house on the market during the traditional Easter selling period.
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