When you consider we are still living with the pandemic and the uncertainty it can still bring, it’s reassuring to see the housing market fare well. With news of high demand, strong sales, and a boost to the construction sector, we explore why a buoyant housing market is good news for all.
The housing market at its strongest in ten years
Statistics from HMRC show the housing market started 2021 on a huge high, with a surge in the number of transactions in February. For February 2021, UK residential property transactions totalled 147,050 which was a 48.5% rise against February 2020. The figure was also 23% higher than the month before, in January 2021. And it is reported that this figure is the highest for February property transactions for ten years. The reasons attributed to the increase include property sales being incentivised by the stamp duty holiday. And there are no immediate signs of these sales slowing down.
The time is right to buy
Many people may well be thinking the time is right to buy with a sense of normality returning as the Covid vaccine is rolled out, and lockdown measures begin to ease. And of course, for first-time buyers there is the added benefit of the government’s mortgage guarantee scheme which is set to start in April. The scheme has been designed to encourage banks and lenders to offer 95% mortgages again. During the pandemic, nearly every single 95% mortgage was withdrawn, leaving first-time buyers with no other way to buy their first home without having a huge deposit. With the scheme, the government will guarantee 95% mortgages, seeing buyers need only 5% deposits for homes priced up to £600,000.
Boost to the construction sector
While overall construction output shrunk at the start of the year in January, UK construction saw a return to growth in February. And it was residential property construction which remained the strongest area of growth for the month. There are reports that January output was hampered by some supply chain issues, as well as the adverse weather conditions. Meanwhile, it was commercial construction work which has massively helped overall output with the sharpest rise in work since September last year.
With new order volumes increasing for the ninth consecutive month, construction companies cite growing demand for residential development as one of the reasons for the uplift. It is hoped that the return to form in February, alongside the other initiatives shared by the government in the budget, will inspire greater construction confidence as we move forward.
Housing developer shares positive results
It was published in the news this week that housebuilder Bellway is seeing strong underlying demand for new homes. This comes from a rise in revenue of 11.6% to £1.7bn in the six months ending January 2021. At the same time their sales volumes saw an increase of 6.3% to a record 5,656 homes. The positive results were also reflected in the average selling price of new homes which rose by 5.8% to £303,206. The housebuilder has a robust order book too, which on 14 March was 8.4% ahead at £1.6bn and a total of 6,028 homes.
It will be interesting to see how other housebuilders have performed in the last few months. With a range of government plans announced, and the positivity around the pandemic, we certainly hope to see figures showing an increase in new home sales.
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