At the same time, the level of activity and demand in the market created a mini boom and saw the average house price increase by £57,790 in the six months to December 2020, up from £373,537 in the six months to June. The Stamp Duty holiday allowed many of those homeowners to offset at least some of that increase. In fact, just 26% of home-movers paid any kind of Stamp Duty in the second half of 2020, compared to 93% in the first six months of that year.
There’s no doubt that the stamp duty holiday, combined strong demand, underpinned a rapid recovery in the housing market, and to that end the extension and subsequent tapering of measures to support activity announced in this year’s Budget was widely welcomed. Those who felt they were on deadline to complete by the March will have really welcomed this breathing space.
But we all know that those that face the biggest challenges in this market are often the ones that want to take the first step on the ladder, which is why next month’s launch of the Help to Buy guarantee scheme will be monumental for so many. While mortgage approvals remain high, over the last 12 months the average first time buyer deposit is up by £12,000 to £59,000. Targeting the longer term support at this group is the right thing to do.
As for the end of this year and beyond, so much remains uncertain. The pace and level of growth in the housing market is going to be very dependent on the UK’s recovery which, of course, is dependent on so many things, including vaccination roll outs and how confident we all feel.
But we do know that this pandemic has affected households in many different ways. Some will be following the Government’s roadmap out of lockdown with cash to spare, as a result of unexpectedly building up reserves. But others may remain on furlough or face the reality of unemployment, which will have an impact on demand.
This time last year we were facing into the UK’s first lockdown expecting a devastating impact on the market. The 5.2% annual growth in house prices we’ve seen since would have been as inconceivable back then as the thought of wearing face masks 12 months on. We wouldn’t predict, nor expect, the same level of growth this year, but that strong undercurrent of demand is good news for the long term health of the market.