"This is a housing market that is still ultra-competitive and it is one that is still very much beholden to the level of stock available. Or should I say, the lack of stock available."
It’s an interesting one, seeing your children become homeowners, especially when you work within the sector and you keep a closer eye than perhaps most on values, particularly when they’re in your local area.
Some might ask, why didn’t she buy earlier in the year when the stamp duty holiday was in full effect, to which I reply that (after the end of this month) first-time buyers continue to receive their ‘holiday’ for properties valued up to £300k (in England at least). In all the ‘fuss’ surrounding the ‘end’ of the Government’s stamp duty largesse, this is a point that some appear to have forgotten.
All in all, despite the focus on what the stamp duty holiday might have done to prices, I think 2021 has been a relatively good year for first-timers. The Government guarantee scheme in particular brought life back to a high LTV mortgage market which was, quite frankly, on its knees.
Given that first-timers are the ones who predominantly benefit from the availability of 5% deposit mortgages, it was obvious to all that they were also suffering more than most from the lack of availability. We are still not at pre-pandemic levels of product choice in this space, but we are inching back there, and the good news is that competition for business is having a real impact on pricing.
However, I’m acutely aware that my daughter is still one of the fortunate ones because this is a housing market that is still ultra-competitive and it is one that is still very much beholden to the level of stock available. Or should I say, the lack of stock available.
I’m also conscious that my daughter is perhaps not helping with this. It’s of course her right to buy a property but by doing so, and not having anything to sell at the same time, she is effectively further diminishing the level of stock available by one. Shame on her.
Now, if we as a nation were building far more houses each year than were being taking off the market in this way, then it would perhaps not be such a bone of contention. But, we’ve not done this in years. Indeed, you might argue we’ve not done this for decades, and the future doesn’t look particularly positive either, even if the Government has set itself the target of building 300k new homes every year by the middle of the decade.
After years of not hitting anywhere near this deadline, this figure will still see as way behind the eight ball in terms of the number of new homes we currently need. Which leads me onto prices and values.
Unsurprisingly, given my line of work, I get asked the question, ‘What are house prices going to do?’ frequently. I don’t own a crystal ball and, every house we value is done so at a specific moment in time, the here and now, and not based on what might happen six/12/24 months in the future.
However, with demand as it is, the underlying driver of prices will be housing stock, which might lead you to a conclusion which suggests that average prices look likely to continue their upward trajectory. What yearly percentage that is remains to be seen, but even with the stamp duty holiday over, there is still enough demand left in the market, coupled with relatively poor stock/supply levels, to think that the Halifax’s August figure of just over 7% pa could be maintained.
What we do know is that stock is king. Agents will tell you that, advisers will tell you that, lenders will tell you that, and so will us surveyors. News that the cost of building homes has risen significantly is not particularly welcome either because developers are going to have to think more carefully about the homes they build, and who might be able to afford them when they add in those extra costs.
New-builds have grown in popularity – many first-time buyers in particular seem to like the thought of a new-build more than a second-hand property as they start out on the homeowning journey. The problem might be that developers find they have to build homes which are not within the budget of the ‘ordinary’ first-time buyer as a result of the increase in costs for materials, the shortage of labour, and the increased wages they might have to pay.
New housing stock might dip even further, and if demand doesn’t fall off, well prices are only likely to react in one way. In that regard, I’m very pleased to see my daughter into her first new home now.
