Non-essential retail is back. Harrogate like so many other towns has been awash with well-known shopping bags during the last couple of weeks, car sales have revved up without a flat battery in sight and coinciding with a burst of sunny weather, pubs, bars and restaurants have reopened for outside drinks and dining. Add in over 42s now being vaccinated, the return of hairdressers, nail bars, zoos, theme parks plus libraries and community centres, there is much to be upbeat about. And all being well there will be further restrictions lifted in mid-May and hopefully on June 21 we will see all legal limits on social contact removed.
So, what about the housing market. Interest rates are minimal and many agents report a shortage of property to sell. Whenever a new instruction is listed, with the odd notable exception, I am sure your local estate agent will be quick to tell you they have had a flood of enquiry with resultant sales taking place in competitive situations. But if it’s so good, why are so many potential sellers being hesitant when the housing market is seeing some of the strongest levels of demand for many years? Surely, it’s a great time to sell and maybe get a better price than you thought possible after all the uncertainties of the last year? Well, I have a theory. It’s not particularly sophisticated nor one that is based on any great economic thinking but it makes sense to me!
We all agree that with lockdown restrictions lifting, and the success of the vaccine program, there’s a feelgood factor in the air. You can add in industry specifics such as the extension of the stamp duty holiday, the government backed mortgage guarantee scheme, and home-owners deciding to reassess their housing priorities and seeking a better work-life balance. The cumulative effect is a high degree of confidence and that bizarrely is where the heart of the current supply problem may lie, namely a lack of confidence in the minds of potential sellers. “We want to move but we can’t” was the frustrated cry from a potential client of mine earlier this week. “We can’t find what we want and when we do, we’re being outbid because others have already sold”. So, they have decided to stay put for the moment. They are in a catch 22 situation, or are they? Well this is where my little theory kicks in.
There may be numerous additional factors but fundamentally the opportunity to save up to £12,500 of what is hard earned taxed income has been the main driver of the recent, and some might ongoing, frothy market. The Chancellor said he wanted to stimulate the housing market and he has succeeded. It is likely some of the hype will recede as buyers accept there is no longer time to exchange contracts and complete by June 30 at which point the stamp duty holiday reduces to £2500 until the end of September. In the meantime, spending on UK Staycations will increase, and with more and more spending options on the horizon, maybe new home ownership might not remain top of the list. And when the stamp duty returns to normal, does this mean the housing market will start to calm down? Simple as it may seem, we may then return to some sense of normality which ironically is what we have all been missing in recent months. So, if you are thinking of selling, perhaps now’s is actually a good time to do it.
Tim Waring, Head of Residential. Tel: 01423 730700.