The number of housing sales agreed in 2021 is 10.1% higher than this time last year. The COVID-19 boom we have witnessed seems to be showing no signs of slowing down any time soon; first-time buyers will now see 90% mortgages back on offer, allowing them to take advantage and finally purchasing their ideal homes.
The annual rate of house price growth stands at 4.3%, the highest it has been since April 2017. According to the House Price Index, the average home is now worth £226,600. Wales has seen the most significant growth rate of 5.6%, with North West England close behind at a 5.5% rise. If we look at the rise through cities, then Liverpool and Manchester top the charts with 6.8% and 6.3% rise in price growth.
So why are the prices rising?
Buying demand is up 12.4% in 2021, compared to the same six weeks in 2020. The Stamp Duty Holiday (which has recently been extended in the 2021 March Budget) has offered buyers an average saving of £4,500, encouraging many to enter the property market now.
Successive lockdowns and work-from-home orders have also allowed home-owners to reassess the suitability of their homes. Many have found them lacking in one way or another and so desired to buy a new home.
COVID-19 also saw the loss of 95% and 90% mortgages as banks tried to protect themselves during uncertain economic times. However, 90% of mortgages are now back on offer, with the government promising to support 95% of mortgages in the future. This has spurred first-time buyers to re-enter the property market and purchase their first home.
So what does this mean for property investors?
This housing boom is expected to continue in 2021 as first-time buyers continue to make a return to the housing market. The number of sales on homes valued between £100,000-£250,000 (a range most first-time buyers focus on) has already jumped 18% since the start of the year.
The government’s new Help to Buy equity loan scheme will also support first-time buyers looking to purchase a new-build home with just a 5% deposit. This is expected to help the housing boom continue throughout 2021, as many first-time buyers take advantage of the low deposit requirements.
For landlords and property investors interested or involved in BTR, it’s time to review portfolios. The proportion of homes listed for sale which were previously rented climbed in nearly every region last year. This suggests that now is the time to consider moving from BTR to investing in new builds or properties for sale, as this is where we see the most demand.
Predictions that this housing boom will continue and house prices will remain high offer property investors an opportunity to make significant profits on property. Targeting the right demographic – such as first-time buyers – during a time like this is essential for making the most of this growth.