The UK Housing Sector – a deep dive insight

May 7, 2021 | Education | 0 comments

Introduction

Unsurprisingly the demand for UK housing continues to rise while supply has hit an all-time low. The low amount of new properties becoming available on the market could perhaps be attributed to the uncertainty created by the pandemic. Lockdown has placed more emphasis on home-living as tenants have endured abnormally long periods of seclusion within their respective homes. This shift in working environments has normalised remote working and created changes in housing preferences. Some changes include urban dwellers increasingly looking at country living. Inquiries into village residencies have drastically increased as new lifestyle choices become available to buyers and families seeking larger properties away from Urban areas during Covid-19. Many factors contribute to the high demand including the UK’s rising population which is estimated to surpass 69.6 million by mid-2029 and approximated to reach 72 million by mid-2041. Another factor to consider is higher divorces rates in the UK with google searches showing a 566.67% increase in the UK for the phrase “Filing for divorce” between 2019 and 2020. Increasing property demand as individuals seek to live alone and more families are living separately.

The Current Situation

The UK property market is booming with demand far outstripping supply. Rightmove surpassed two billion minutes spent on their website in one month for the first time in March 2021. Other companies have similarly reported record-breaking interest. Rightmove also reported having the lowest recorded level of the average number of days to sell a property while the number of houses selling per week has reached its highest-ever level. The full effect of Covid-19 on the housing sector remains to be seen as the stamp duty holiday has been extended and continued lockdown uncertainty causes figures to fluctuate. This volatility is likely to continue until the unpredictability around the pandemic decreases.

Tim Bannister, Rightmove’s Director of Property Data commented, “This is only the second time over the past five years that prices have increased by over 2% in a month, so it’s a big jump, especially bearing in mind that the lockdown restrictions are still limiting the population’s movements and activities.”

The latest house price data published on GOV.UK and the Office for National statistics by HM Land Registry for February 2021 shows that average UK house prices have increased by 8.6% over the year to February 2021, making it the highest annual growth rate the UK has seen since October 2014. Geographically average house prices have increased to £268,000 (8.7%) in England, £180,000 (8.4%) in Wales, £162,000 (8.0%) in Scotland, and £148,000 (5.3%) in Northern Ireland. Within England itself, the North West has received the highest annual increase in average house prices (11.9%), while London saw the lowest (4.6%). Meanwhile, mortgage approvals for house purchases, which is a predictor for future lending activity, reached 103,400 in December 2020, far higher than the pre-pandemic February 2020 figure of 73,400, as stated by the Bank of England. Rightmove’s house price index is more frequently updated than the HM Land Registry which has a two-month lagging period although Rightmove’s data is based on asking prices and not sold prices. Recently Rightmove’s April report found that average asking prices have risen by 2.1% month-on-month and 5.1% year-on-year. Moreover, 145,000 new properties were placed on the market in April but were still not enough to meet buyer demand with two- and three-bedroom semi-detached homes selling the fastest.

Colin Bradshaw chief customer officer for TwentyCi commented, “The lack of properties coming to the market has the potential to jeopardise or temporarily cause a slow-down in the market. Keeping the levels of residential stock to purchase sufficient to satisfy the continued surge in buyer demand, on the back of government stimuli and pandemic induced work and lifestyle changes, is critical to help maintain the economic recovery.”

The Government temporarily cutting stamp duty (property tax) for buyers has meant many new homeowners who move before the deadline save money. With the recent extension to the stamp duty holiday, housing prices may continue to rise over the next few months. Since the announcement the number of houses being sold increased dramatically. Preliminary data from HM Revenue and Customs (HMRC) indicated that approximately 190,980 sales were recorded in March. Nearly twice the amount reported a year earlier with 32% more than the sales in February possibly due to buyers rushing to meet the previous stamp duty holiday deadline of 31 March.

Richard Freshwater, Director at Cheffins stated, “This is the biggest lack of stock we’ve seen on the market for at least the past 20 years. Demand is huge, created by a perfect storm of low-interest rates, the stamp duty holiday and changes in people’s working patterns.”

Looking Ahead

With the stamp duty holiday being extended the estate agency Savills believes house prices will rise by approximately 4% in the remainder of 2021. This sentiment is echoed as the rise in demand has not been met with sufficient new properties. Indicating that for the next few months it can be expected that house prices will continue to rise. However, it can be safely assumed that once the temporary stamp duty reduction ends, house prices could begin to slow down or slump. Zoopla has indicated that it is their belief pent-up supply will flow back to the market when lockdown restrictions are significantly eased and vaccinations continue successfully. Zoopla further stated that they believe growth in house prices will become moderate when these factors come into full effect and the housing market will likely become even busier in the coming months as the economy continues to recover.

Script&Go Allies with Homeowners and Home Builders

Script&Go is committed to creating value alongside clients to keep refining how we can best serve client needs. Recently Script&Go launched an extension of its Site Snag product offering. It came to the company’s attention that receiving defect complaints from homeowners via phone, email, and letter created confusion, unnecessary costs and added administration which caused delays in rectifying homeowner concerns. Additionally, record-keeping of complaints became complicated with multiple homes, defects and site locations. These considerations caused the creation of Site Warranty.

Homeowners of newly built properties now have a coordinated way to report any defects discovered in their homes by easily filling out an online form through the Site Warranty application that can be accessed from anywhere in the world on their mobile or other devices. Site Warranty offers homeowners the option of adding pictures and selecting the affected area on their digital floor plan. Selected personnel are then automatically notified about the defect. This allows remits to be accepted or rejected (according to the discipline in question) before being passed on to operational teams or subcontractors for corrections. Reports on the number of defects, their description, location and status can be generated at any time for Home Builders to review. Making record-keeping more effective and convenient to minimise costs, time, and administrative duties.

Script&Go’s tried and tested Site Diary remains a product of choice for many businesses. Site Diary was created to improve communication between back-office staff and site workers by making information available in real-time on one unified platform. Increasing productivity through recording day-to-day activities in a bespoke way. Traditional methods of recording site work included scribbled writing at the end of weary workdays or cumbersome excel sheets. Site Diary allows site workers to record their daily activities throughout the day on their mobile or other devices, while also giving them the option to upload pictures creating a more complete description of activities. This continuous feedback filters into comprehensive reports on the work happening on-site at multiple locations with picture evidence, trackable performance and productivity analysis all available in one place. Site Diary is specially designed to make life easier for site workers, replacing laborious handwritten reports with state-of-the-art convenience. Site Diary is further extended with Site Task, a tool to delegate, assign, and allocate tasks between working teams and personnel at different site locations. Tracking work performance allows for a more productive work week through having an agile and well-planned workforce with real-time updates and productivity reports on one user-friendly platform.

Script&Go will continue to look for new innovative ways to customise its product offering to better serve client needs. Co-value creation is the bedrock of innovation and productivity. Partnering with our clients to foster greater trust and more effective solutions for the construction industry.

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