When compared to June of last year, there’s been an annual decrease of 0.1% in house prices across the United Kingdom. While this may not seem like too much of a difference, the cause of the drop and what it could mean for investors is currently taking its toll.
While this is certainly not ideal, it’s not all bad news for everyone. Most individuals can benefit from the fact that prices are currently lower – although it can still be vital to have a better understanding of how home buying in general will be affected and how to make the most of your purchase despite the current circumstances.
The effects of COVID-19 on house buying
Much like the majority of the economy, the property market in the United Kingdom has taken quite a hit from the coronavirus pandemic. With lockdowns being in place, the number of sales that have gone through have been greatly reduced.
Nobody prepared for such an event to happen and therefore many industries have experienced some kind of issue – with many coming to a complete standstill. As a result, there have been a number of difficulties for a range of businesses nationwide. With the virus being as fast spreading and dangerous as it is, it’s not hard to see why house buying in general took a large hit for both sellers and investors.
While things have slowly been going back to normal in recent weeks (in terms of lockdowns being reduced and an increase in property transactions being made in some areas), there are still many individuals who are now less confident to actually sell/buy, which has an impact on the market as a whole.
A consistent reduction can seem very appealing for those hoping to buy a house for less, but it’s also important to consider that purchasing has become more difficult. This could be because less people are willing to sell or because it’s now more difficult to secure a mortgage, but it has certainly turned many investors away from the potential profit that’s out there.
Prices also dropped over the past months in Wales and Northern Ireland too, and at the moment no one is quite sure if they’ll begin to increase, stay relatively the same, or drop further over the coming months.
What are the government doing to help?
If you look on the bright side, you’ll see that the UK government are working to help support buyers to keep house sales going throughout these uncertain times.
For example, a 9-month stamp duty holiday is currently in place in England and Northern Ireland, with a threshold up to £500,000 (giving many individuals the opportunity to literally save tens of thousands of pounds). It lasts until March of 2021, which has encouraged many people to try and make a transaction now rather than later.
A tax cut for Scottish home buyers has just been put into action, too. The starting point for land and buildings transaction tax is planned to rise to £250,000, which should save investors a large amount of cash on their purchases. The Welsh government is also aiming to help local buyers and investors, with property sale tax being negated on residences up to £250,000.
Even as things are currently difficult for so many individuals across the United Kingdom, it’s good to know that the government is trying to encourage more people to make transactions, boost sales and overall improve the current state of the market.
What can we expect to happen in the future?
With lockdown measures being eased even further (and across the country), it’s safe to say that the market overall should start picking back up again soon. While levels aren’t likely to be as high as they were before the virus struck, there’s a good chance that things will start to look up; especially with the procedures that the government has put into place to help. Either way, the second half of 2020 will certainly test the property market and give us an indication of things to come.
One issue that many people are wary of is what will happen when the support being offered to workers is reduced. As it’s gradually removed and unemployment rates begin to rise, a number of economic issues are likely to present themselves – which will have an impact of its own on house prices. For this reason, now could be the ideal time to make the most of the current climate.
How to take advantage of the situation
Those who are waiting for the world to get back to normal before settling into business aren’t making any profit during this time – and because of this, you’ll have a much better chance of taking advantage of the lower demand and tax reductions.
Despite the difficulties in place, there are still many golden opportunities waiting to be seized, with many residences that would already have been snapped up if it weren’t for the virus scaring off many competitors. Not only does that leave you with more options, but the lower demand also encourages sellers to reduce their prices to make their properties more appealing to any potential buyers that come their way.
The fact that there’s little to no stamp duty, LBTT and Land Transaction Tax to pay for a limited time is also something that you simply can’t miss out on. You could save so much (both on those below and over the threshold) in any part of the United Kingdom – but only until the end of March 2021.
The future is uncertain and nobody is quite sure on what the housing market will be like in a year’s time. At the moment, having an understanding of the pros and cons, and the risks and rewards can be very beneficial indeed. Whether you’re looking to buy a home or you want to invest in a property and sell it later on, there are several reasons why now could be the perfect time to do so.