The UK Government’s decision to lockdown the nation as a result of the COVID-19 pandemic sparked fear with regards to the economic state of the UK and its recovery process. As the UK economy shrank by 20.4% from April-June, it is clear that the pandemic has had devastating effects in certain industries. However, contrary to first predictions, the property market is currently experiencing a mini boom with the support of the Chancellor of the Exchequer. Initially expected to crash, as seen in 2008, there is hope for the property market of the UK. Rishi Sunak’s stamp duty holiday until 31st March 2021 provides a great opportunity for those looking to buy property currently. Both Manchester and London have experienced busy months in the light of lockdown release. It has been reported that between July and August numbers buying a London house or flat rose by 44%. A similar trend can be observed in Manchester.
It is not surprising that the property market in Manchester is booming and has done so for a few years. The Northern Powerhouse initiative of 2014 promised to reinvigorate the North-West and it is working. Manchester’s economy has grown two times faster than London’s since 2014. The city is now thriving with many businesses relocating to the north. The BBC, ITV and Talk Talk have their headquarters based in Salford and with jobs comes the demand for property. With the cost of living in Manchester 28% cheaper than in London and much cheaper land prices, the City of Manchester and its outskirts are now in high demand for housing. An expected 100,000 more people are expected to be living in the city centre by 2025, many of those graduates who have chosen to remain in the city following completion of their studies.
There is no doubt that lockdown has made many people reassess their lives. Weeks with little chance to leave their homes has made many decide that now is the right time to look for a new property. Whether that be first-time buyers realising that they need their own space, or a current homeowner’s desire for a larger property, transactions are now well above pre-lockdown figures. With many people now working from home more regularly, space is vital and there has been a rise in enquiries about properties with gardens or green space nearby. The stamp duty holiday now means that an estimated 9 out of 10 people won’t pay any stamp duty land tax, an obvious factor is the sudden rise in property sales and purchases. An increase in purchases of off-plan sales can be recognised across the country. Salboy’s 40 storey development- “The Viadux”, in Manchester, has seen strong demand post-lockdown highlighting people’s desires to secure a property before the stamp duty holiday ends.
International investors can also benefit from the stamp duty holiday making it an ideal time for overseas investment.
What about Brexit?
It would be very difficult to accurately predict the effect of Brexit on the property market until the UK agrees some sort of deal with the European Union. The referendum result back in 2016 perhaps contributed to the plateau in property prices in the UK in the months following the referendum. However, it is important to note that this plateau is expected in the winter months with growth predicted every spring. The pattern was seen in 2017 too. In November 2019, average house prices in the UK were at a peak of £235,298.00 as per the house price index. This suggests that the impact of Brexit in relation to house prices has been fairly limited. Therefore, it is more than likely that once a deal has or hasn’t been reached, the effect on the property market will be realised. A no-deal Brexit may have implications for foreign investment from EU residents.