The acceleration of the housing market is breaking even more records

By Jo Bentham30th June 2021

Whilst some expert commentators predicted the housing mini-boom that ensued in the aftermath of the UK’s first Coronavirus-related lockdown could be short-lived, over 13 months after it began, the market is still extremely active and breaking even more records.

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With Rightmove reporting there were more than 700,000 house sales in progress on 16th June 2021 – the highest number seen in the past decade – it’s unsurprising that 2021 is on course to be one of the top 10 busiest years since 1959, according to Zoopla’s latest House Price Index.

And though one of the Government measures introduced to strengthen the housing market has begun to taper – with the nil-rate band for stamp duty now reduced from £500,000 to £250,000 until the end of September 2021 – this is not expected to have an extensive negative effect, as demand was soaring even prior to the announcement of the incentive. 

 

The market is reaching new all-time highs

A staggering 1.5 million homes are set to change hands in 2021, 45% more than in 2020, with interest in properties for sale also increasing by 29%. 

Nationwide's House Price Index shows that annual house price growth increased to 10.9% in April, whilst data from Rightmove revealed the average price of properties coming onto the market hit a national record in May at £333,564.

And a significant number of homes are even selling above asking price, with two core factors appearing to be spurring these record-breaking figures: a desire for more space, and a lack of appropriate housing. 

Working from home became the new normal after Prime Minister Boris Johnson ordered those who are able to do so in March 2020 – an order that is still in place to a large extent. And as more and more companies announce no full-time return to the office will be required even post-pandemic, an increasing number of people are re-evaluating what is needed from their homes. 

For most, this means opportunities to move outside of cities (as commuting is no longer an issue), the need for a house instead of a flat, or the desire for green spaces on the doorstep. 

Both confidence in the market’s performance going forward and the demand for homes is strong, but the amount of housing stock is far below what is needed to cater for this post-lockdown surge alongside the UK’s housing shortage that has spanned decades.

In April 2021, Rightmove reported that even their 145,000 new listings were not enough for the record-breaking number of prospective home-movers visiting the site – but this undersupplied demand presents impact-driven investment opportunities for experienced investors.

 

Opportunities for experienced investors

With a Government-set target of 300,000 new homes per year going unmet time and time again, it is accepted on a wide scale that small and medium-sized housebuilders must be able to re-establish themselves in the market after their decline in the aftermath of the financial crisis. 

In the Government’s ‘Planning for the Future’ white paper published in August 2020, emphasis was placed on the importance of these regional, SME housebuilders in tackling the housing crisis – and to help them do so, alternative finance is crucial.

To help provide this, experienced investors can invest into the likes of property bonds, with which potential returns can range from 4% to 8% and be tax-free when held in an Innovative Finance ISA (IFISA). 

On top of this, supporting small and medium-sized housebuilders in delivering much-needed new-build homes enables investors to make a positive societal, economic and environmental impact – strengthening the ESG weighting of their portfolio, aiding in driving economic growth and assisting in transforming communities. 

And as research conducted by Warwick Estates shows new-build properties are selling for 29% more than existing homes nationwide – with the highest new-build price premium found in the North East of England, at 53% – now could be a better time than ever for experienced investors to consider property bonds as part of a diversified investment portfolio. 

 

A positive outlook for the property market

Exceeding expectations since it was able to reopen following the easing of restrictions in May 2020, the outlook for the property market remains positive. 

And whilst the numbers look optimistic for home-sellers in particular, they could also provide property investors with the confidence to invest into a sector that has proven to be resilient, and whose demand is unlikely to diminish.