UK Home Prices Rise Unexpectedly in January and Early February
Britain experienced an increased demand in its housing market last month, even though there isn't enough time remaining for buyers to take advantage of the tax benefits announced last year. This demand was reflected in a survey conducted on Monday this week.
Rightmove figures
Rightmove is one of the UK's top websites for purchasing property. Its data from 10th January to 6th February showed that the average price of the properties being listed on its website rose by 0.5% compared to the previous month.
In the first week of February, traffic to Rightmove's website was up 45% in comparison to last year. The number of successful deals also rose by 7%. However, seller numbers went down by 21%. One reason for this was that people were mostly busy home-schooling their children due to lockdown restrictions.
Director of Rightmove, Tim Bannister, said the modest increase in demand was mainly due to lockdown restrictions limiting supplies and creating upward pressure on the prices. He said the housing market is certainly not going to crash once the tax-relief announced last year expires on March 31st.
What happens after 31st March
Early last year, finance minister Rishi Sunak announced that properties costing less than 500,000 pounds were exempt from property tax. This move was meant to encourage people to buy properties. However, this incentive expires on the 31st of next month. People looking to buy a house right now might not be able to seal the deal until that date and therefore may not benefit from the tax break. The fact that people are interested in buying, despite the expiring tax break, is a positive sign for the economy.
Other measures, however, show a decline in property market trends. According to the Royal Institution of Chartered Surveys, agreed sales, new buyer inquiries and sales expectations all went down in January. Home price growth also slowed last month, confirming that the housing market isn't completely out of the woods yet. If that is true, the government may have to offer more incentives during next month's budget announcement.