When it comes to the different industries weathering the disruption caused by the COVID-19 pandemic, few can meet the standout performance of the property market.
A key driver of economic growth, productivity and investment, residential real estate has been in high demand amongst international and domestic buyers.
The numbers are impressive. Over the course of 2020, the average price of a residential property experienced its highest level of growth witnessed since 2015 – finally putting an end to the four years of price stagnation as a result of Brexit uncertainty.
In fact, during the opening three months of 2020, Rightmove recorded the greatest surge in Q1 house price growth since 2003. This is all the more impressive given such growth occurred amidst the pandemic.
As a result, the average house price rose by 6% in 2020.
Keeping in mind that this occurred during a pandemic and a time when a large number of traditional mortgage products had been taken off the shelf, we should not downplay the success of the industry.
The reason for this sudden spike in demand can be attributed to the Stamp Duty Land Tax holiday. Announced in July by Chancellor Rishi Sunak, the holiday offers savings of up to £15,000 for those transactions taking place in Northern Ireland and England.
The holiday is due to expire on 31st March 2021, yet given its’ success in unlocking property investment, calls are mounting for the Chancellor to extend the holiday so that buyers do not risk missing out.
Mainstream lenders are already anticipating a flurry of new enquiries as buyers look to take advantage of the holiday during this closing window of opportunity.
The big worry at the moment is whether this demand will be met, particularly for those in difficult or complex financial circumstances – something that has become increasingly common as a consequence of the pandemic.
With the Chancellor set to deliver the 2021 Spring Budget on 3 March, the wider property market is hoping he will use this opportunity to announce an extension of the holiday.
I see merit in extending the holiday. Few could have expected such a positive response and, with enquiries still high, I believe there is still a role for the holiday to play in stimulating property investment. This is important not just for the industry, but the wider economy.
As I mentioned earlier, the real estate market is a key pillar of the economy. On this basis, any strategy that aims to bring about the post-pandemic recovery of the economy will need to include measures that support the property market. The 2021 Spring Budget is an ideal time to announce such a strategy, which could include an extension of the holiday.
Looking beyond the immediate future, I am confident in the future prospects for the property market.
Over the years, the UK has been able to effectively establish itself as a leading destination for investment into bricks and mortar.
This partly has to do with the diverse range of opportunities on offer, from buy-to-let investments to new-build constructions.
This will remain the case, which is why I am supportive of any measures that ensure great access to property investment in the UK.
Paresh Raja, CEO of Market Financial Solutions