There has been lots of talk about the surprising strength of the housing market recovery since May and the role that the stamp duty holiday has played in this revival. But there has been less focus on such key factors as the cyclical nature of property markets and how the decision to buy a home depends on affordability and the availability of finance.
The housing market’s bounceback surpassed many people’s expectations. By early June, there were more people looking to move home than at the same time last year, a trend in line with other global property markets that have emerged from lockdown.
Since the announcement of the nine-month stamp duty holiday in July, there have been double-digit rises in buyer numbers in every region, with the largest increases in London and the South of England.
First-time buyers have been at the forefront of the recovery. This group may have the least to gain from the stamp duty holiday, but in every area, their numbers are 40% higher than a year ago.
There has also been a bounce in home mover numbers – up by a third over the same period. More investors are also looking to buy, despite tax increases that have made buy-to-let less attractive.
However many of these buyers are choosing to put their long-term lifestyle ahead of economic uncertainty. Most have been unaffected by the economic damage wrought by covid-19 and have already built up substantial equity in their homes.
In the early months of 2020 price growth was strongest across the Midlands and the North, where affordability remains less stretched. This is consistent with what was happening 13 years into the last property market cycle which began in the early 1990s and ended in 2007.
While most of 2020 has and will be dominated by the bounce back from lockdown, the rules of the property market cycle still apply and will influence what happens in the months and years ahead.