As things slowly move towards normalisation, the housingmarket seems to be on the brink of unpredictability. Despite seeing an all timehigh at the end of last year, thanks in part to the stamp duty holiday, thereis still a question looming over the housing market on whether a slump is dueor not.
While predicting the fluctuations in the housing markethasn’t been much of a technicality, the price increase in 2020 had added anelement of uncertainty to it. The clouds of this uncertainty cleared somewhatwith the extension of stamp duty holiday. Chancellor Sunak has extended ituntil June 2021. And from there on, it will be tapered till September of theyear.
Will the Extension in Stamp Duty Holiday have a Positive Impact?
The move will not only help homebuyers save up to £15,000but will also lend the housing market price a shoulder. In fact, the extensionhas already started showing its impact. The housing market is slowly andgradually gaining momentum. A little fact checking reveals that the demands areat an all time high.
Nonetheless, as the song goes, “…with the good comes thebad…” same seems to be case with the extension. The rise in the activity in theproperty market has slowed down the transaction completion process. This putsmany transactions at a risk of being incomplete by the end of the extensionperiod.
This is not also just some idle chatter. The popularhomebuying platform, OneDome, recently conducted a survey amongst 5000 estateagents in the UK, asking them to highlight the issues they are currently facingin completing transactions. About 74 percent of all the participants said thatit was the slow transaction speed.
The same was highlighted by a research commissioned by theBEIS, where both parties, buyers and sellers, complained the whole process tobe at a snail’s pace.
Can Housing Market Expect a Slump?
However, the stamp duty holiday is just one of the manyfactors impacting the housing market. Others include; the effectiveness of thevaccination programmes, the duration of the pandemic, the speed of economicrecovery and normalisation of business processes, and, of course, the globaleconomy.
Honestly, the housing market is just under too much pressureand the slow economic recovery of the country is not helping it much. Just asthe stamp duty holiday, the furlough scheme is also set to end on September ofthis year. And so are a majority of other government’s business supportprogrammes.
All these schemes may have provided a temporary support butas they come to an end, they are building a pressure on the market. If there isa drop in the income of majority of households, the mortgage repayments willnot be timely made. Many might even be forced to make a sale to avoid anyrepercussions of non-payment.
The selling force in the market will put the classic demandand supply law in action and the prices will surely take a hit.
Is there a Hope for the Price to Rebalance?
In the light of everything that has occurred during thepandemic; cushioning schemes from the government, patience from the banks, andthe possibility of savings in light of the paid off debts in 2020, all hope isnot lost. With the third lockdown restrictions slowly being lifted, there is alikely chance for the economic stability.
Nevertheless, the actions of the government, banks, andpeople reflect that certain supportive schemes will be presented in case of afuture breakout. Such actions raise hope, if not guarantee it, that, ifanything, the housing market is likely to sustain itself then collapse in anypossible future.
