Over the past year, there’s no one that hasn’t been affected by Covid in one way or another and the housing market is no different. When the initial lockdown came into place in March 2020, the housing market was shut down, with everyone being confined to their homes.
However, it didn’t take long for the government to open the housing market back up but this time with policies in place to boost housing demand, hoping this would be enough to stimulate the housing market and the wider economy.
The stamp duty holiday was the most notable policy put in place, allowing complete relief of any stamp duty tax up to £500,000. This change kickstarted the housing market into action, with anyone who’s considered moving deciding it was time to sell up and find somewhere new. The sudden increase in demand meant a big upward pressure on property prices, causing them to rise.
“Despite this positivity around the housing market in the middle of a pandemic, a question is raised as to what will happen to property prices after the pandemic has passed and there’s no longer any stamp duty relief” claims Jonathan Christie, owner of the we buy any house outfit, The Property Buying Company.
Question is, will there still be people looking to move or will we see the housing market, and its prices, come crashing down?
Let’s explore the options…
Dip and then rise again
A possible effect of the end of the pandemic on property prices is we see them initially dip but after a period of time begin to rise again.
The end of the stamp duty holiday makes buying a new house more expensive again, meaning it’s a less desirable option. The stamp duty holiday also prompted a lot of people to move and as a result there’s now very few people still looking for a new house. This lack of desire will cause a drop in demand, resulting in a drop in prices.
It’s worth noting the drop in prices may not mean they become ridiculously low – they may just fall back in line with where they were in a pre-pandemic world.
However, after a period of time, there naturally becomes a want to move again, whether that be through first time buyers, those looking to downsize or maybe someone just wanting a change.
As a result of this, demand begins to spike, pushing the house prices back up again.
Another possible effect the end of the pandemic may have on property prices is that they plateau, “in the cash house sale sector we’re starting to see a lot of this” adds Jonathan Christie.
As a result of various lockdowns, we’ve all been forced to spend more time in our homes. This has meant we start to care more about our houses and making them look as good as they can. Instead of going thorough the big expense of moving to a new house (soon to be made even bigger with the end of the stamp duty holiday), making additions to our own homes has become more appealing.
Whether this be something small, like repainting, or something much bigger, like an extension, either option is almost certain to be cheaper than moving to a whole new house.
With people no longer looking outside their own front door for something new, this will cause both a drop in demand and supply of housing. When demand and supply drops, pricing actually stays the same, meaning property prices could just plateau at the level they’re currently at.
Continue to rise
A final thought on what could happen to property prices after the end of the pandemic is that they could actually continue to rise. Despite the end of the stamp duty holiday, there are still other policies put in place by the government to try and boost the housing market.
For example, a new help to buy scheme has been put in place, allowing first time buyers to get up to 95% mortgages, meaning they only have to save up 5% for a deposit.
As a result of this, demand could still continue to be high, with supply staying the same, applying pressure on property prices and pushing them up.
Also, in a post pandemic world, there will be less uncertainty, with more people feeling more secure. For example, people may feel more secure in their jobs without the constant fear of being laid off or furloughed.
With people feeling more settled, they will also feel in a better position to make more permanent decisions, with moving to a new house one of the most permanent decisions one can make. This security may be another factor which contributes to an increased demand for housing, meaning property prices will continue to rise.
The best thing to do when all this has blown over and the market has settled down is to figure out how much your house is worth, you can research this yourself using online property portals, visit estate agents or use online tools.
One thing we, as a nation, have all learnt over the past year is nothing is easy to predict, and any rumour or speculation may end up coming to nothing. Having said this, the housing market is a ‘special’ market when you compare it to others – whether it’s a lot or a little, there will always be a demand for housing.