House prices: What does Budget 2021 mean for the housing market?
House prices: Chartered Surveyor discusses impact of lockdown
When you subscribe we will use the information you provide to send you these newsletters.Sometimes they’ll include recommendations for other related newsletters or services we offer.Our Privacy Notice explains more about how we use your data, and your rights.You can unsubscribe at any time.
The housing market has long served as a useful gauge for financial stability in the UK. During 2020, when the first lockdown emerged, the market briefly shrunk, and house prices dropped. But the sector has since bounced back and will continue to do so with help from the Chancellor’s latest budget.
What does Budget 2021 mean for the housing market?
Rishi Sunak announced two new policies to help prop up the housing market in his latest budget.
Mr Sunak has decided to extend the stamp duty holiday – which freezes extra property costs – to June 2021.
He also introduced a five percent mortgage scheme to come into effect next month.
Property experts expect the former policy will encourage home buyers to act as they did when the Chancellor introduced the holiday last year.
Jess Mitchell, office manager at Gascoines, a Nottinghamshire-based estate agent, thinks markets could see a listing boom.
She said: “Following the initial government announcement to introduce a stamp duty holiday, the market saw house hunters relieved of costs and induced a mini housing boom as sellers were eager to take advantage and complete transactions in time.
“Rishi Sunak initially set the holiday, which extended to properties under £500,000, to end on March 31, 2021, but has announced the deadline will now be extended to June 30 with the nil-rate then lowered to £250,000 until the end of September.”
“We’re therefore expecting to see a high number of properties listed over the coming weeks and offers placed in very short time periods, from now until September to really make the most of the extension.”
The Chancellor’s latter plan should help renters buy their first home.
His mortgage plans will see the Government front five percent of a home’s cost.
The policy should allow lenders to offer mortgages worth 95 percent of a purchase price, up to £600,000.
Rishi budget makes working and middle classes seriously poorer – ANALYSIS
Brexit freeports: Rishi identifies regions to get post-EU exit boost – MAP
Budget poll: Should Rishi Sunak have frozen pension allowances? – POLL
Ms Mitchell said the policy would help interest rates return to “normal”.
She added: “With the uncertainty surrounding COVID-19 over the last 12 months, the property market witnessed lenders withdrawing their 95 percent mortgage offerings and demanding deposits of 10 to 15 percent, with much higher interest rates.
“We’re starting to see these rates dropping back to normal levels again, and with the new government scheme, we hope to see more first-time buyers coming through the door and getting their foot onto the property ladder.
“My advice would be to always aim for higher than your deposit and if possible, have this ready – along with a mortgage in principle – before you start looking for a house and seek advice from your local estate agents or mortgage advisors.”
Colby Short, founder and CEO of GetAgent.co.uk, an estate agent comparison site, said potential buyers should be careful not to borrow beyond their means.
He likened the news to a “sweet treat”, but added the policy should come with a “health warning”.
He said: “Borrowing beyond your means is a short cut to financial difficulty, and while many will be tempted to do so given the lower initial cost of buying, it’s important to remember that a property purchase is an expensive, long-term commitment.
“Particularly if you find yourself on a variable rate mortgage, it can be a slippery slope where monthly repayments are concerned as soon as interest rates start to creep up again.”
Source: Read Full Article