According to trade body UK Finance, 2021 is on course to be the strongest year for home-buying activity since 2006.
“Covid-era activity set to eclipse everything since the credit crunch”
UK Finance said while the first few months of the pandemic, during which the property market shut down for a time, led to predictions that sales would slump, the reality was very different, with
“Covid-era activity set to eclipse everything since the credit crunch”.
The construction sector has also proven resilient during the pandemic, with Advantage noting last week that construction output had risen to its highest rate in four months in November.
The Guardian reported that while official figures have shown that the number of house sales tumbled in the weeks immediately after the end of the stamp duty holiday in England and Northern Ireland, which finished on 30th September, this followed a record surge in activity during the latter half of 2020 and earlier this year.
Flexible working patterns give house buyers more options
As reported by the Independent, UK Finance’s report stated:
“Following the unprecedented peak in lending in June, as borrowers rushed to complete house purchases before the end of the second phase of the stamp duty land tax holiday, activity levels dropped sharply.
“This pattern is a predictable and familiar one, with home buyers bringing purchases forward in order to save a significant sum of money in what is typically the largest single financial commitment they will make in their lifetime.
“However, the drop-off after the June deadline was significantly less pronounced than after previous stamp duty changes, as the third and final phase of the exemption remained in place until the end of September.”
Stamp duty is not the only factor which has been driving moves in 2021.
The report said that as employers have introduced more flexible working patterns, “home owners who were previously constrained by relatively low levels of equity with which to ‘staircase up’ the housing ladder within the city where they work can now do so in a different location where their existing equity will go further”.
“Cautious optimism” for 2022
Eric Leenders, managing director, personal finance at UK Finance, said:
“Following the end of the furlough scheme and the stamp duty holiday, activity in 2022 will inevitably be weaker than this year but an improving labour market outlook gives cause for cautious optimism.
“However, there are downside risks, including from rising inflation, which have the potential to constrain activity.
As Advantage wrote in October, house prices are set to rise by 13 per cent over the next five years following a bumper 2021, according to Budget forecasts. If these forecasts prove to be accurate, we’ll see somewhat more gradual, but sustained, house price growth for years to come.
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