What Will Keep the Housing Market Steady?

News at Musker McIntyre | 27/09/2021

What Will Keep the Housing Market Steady?


Thanks to the stamp duty holiday, the property market has revelled in a mini-boom over the past year, despite the country battling the coronavirus.  But now the stamp duty holiday is coming to an end, there are the pessimists in the media that are predicting a housing market crash with house prices crashing.  But is that really going to happen and is the property market under threat again?

When the Chancellor introduced the stamp duty holiday a year ago, the country was in the middle of the worst pandemic in history, and something needed to be done to stimulate the property market.  It did its job handsomely; it got people moving again, it helped out businesses and it boosted the economy.  But as we near the end of September and the end of the stamp duty holiday, there are fears that not only will the market slump, it could spell catastrophe.  But hold on; the property market in the UK has always had its peaks and troughs.  Yes, the market is likely to slow down and yes, prices may drop, a little.  But there are several factors that will actually help keep the housing market steady over the coming years.


95% mortgages

You may have seen this promoted as a 5% deposit scheme and it is due to continue until December 2022.  This government-backed scheme, in association with leading mortgage lenders, has been introduced to help first time buyers and people purchasing a home that has a value of £600,000 or lower.  Buyers are able to take advantage of putting down a much lower deposit on a property.

The scheme has opened up the possibility of moving house or buying their first home for many, particularly those that are on low incomes and struggle to save a deposit, or those that need to move to a bigger house but have little in the way of equity on their current property. 

Not only is this likely to encourage first time buyers, who will also not be paying stamp duty on their first home if it is under £300,000, it will also encourage people to move home and thereby create the supply of properties that are in demand.  However, we do have to point out that 95% mortgages incur higher rates of interest due to the risk factor taken on by the mortgage lender.  The good thing is that there are now almost 200 types of mortgages available via the Government’s scheme offering 5% deposits, as long as people applying meet the eligibility and affordability criteria.


A move to the suburbs

What became a trend during the pandemic as working from home became the norm is set to continue.  As the country starts to get back to work and offices are opening up again, many businesses are starting to embrace at-home working for their staff, even if it is on a part-time basis.  The knock-on effect on the housing market is the trend to move to more rural locations with gardens, sheds and spare rooms to convert into an office, as well as being nearer to greener outdoor spaces, is not going to change in the near future. 

Many living in London and other major cities who were content with their no-garden, office a walk away lifestyle have had a chance to reassess what’s important during the pandemic.  Outdoor spaces, a home office and somewhere to park the car off the road are now topping the list of desired features for buyers.

Where are they looking?  Anywhere that is commutable to where they work.  For example, those living in London are moving outside of the M25 instead of the city or the London suburbs inside the M25.


Record-breaking low interest rates

The Bank of England’s base rate is at 0.1% and presents an ideal time for borrowers.  Indeed, mortgage rates are below 1% and whilst 5% deposit mortgages are available, the larger the deposit, the better the mortgage interest rate. 

The good news is that whilst inflation is predicted to be 4% in 2021, the UK economy is recovering faster and is predicted to have grown by 7.25%.  It has also been predicted that interest rates are unlikely to rise this year, despite the rise in inflation. 


A growing buy-to-let market

The combination of low interest rates, increasing rental returns and some of the best mortgage deals seen for years, there is a growing army of landlords despite the changes to capital gains tax (CGT).  Property investors and buy-to-let (BTL) landlords with long-term strategies are building property portfolios, particularly in up-and-coming locations. 

A new report issued by Shawbrook Bank has found that 34% of landlords are planning on expanding their property portfolios over the next 12 months.  Of the 1 in 10 that are intending to buy in different areas, mainly driven by a change in priorities by tenants, 30% are looking at more rural locations predominantly in the north east of England.  Our experienced and trustworthy team are here to help with your Lettings & Management - contact Adam Halls on 07549 186114 or Helen Murphy 07990 712534 - adam@muskermcintyre.co.uk or helen@muskermcintyre.co.uk


The return of a let-to-let market

Popular after the financial crash of 2008/09, 2021 is seeing a return of the let-to-let market, i.e. renting your current property and moving to a bigger, more rural rented property.  Predominantly driven by the rising costs in moving house and the increase in rental returns, homeowners are finding that they are able to rent out their home for a sufficient monthly income and go on to rent the property they want within their budget, and quickly.  This tactic is particularly popular with owners of leasehold flats and apartments who want to move to a house with space and a garden, and are struggling to trade-up in the property market.


Musker McIntyre is a leading independent, multi-faceted property agent in the heart of East Anglia, covering Norfolk and Suffolk.  They have a wealth of experience marketing a wide variety of properties with a proven track record as experts dealing in Sales, Lettings and Property Management.  Discover how Musker McIntyre can help you sell, buy, rent or let a property by contacting us for more details.
Tel: 01603 859343