TPP383: Market update: July 2020

The recent stamp duty announcements have been met with controversy, with some criticizing it as a "bung" for landlords. However, as Rob and Rob discussed, this temporary tax break applies to all buyers, including investors and second homeowners, but the 3% surcharge on investment properties still remains in place. The Labour Party's criticism of the stamp duty holiday seems to be politically motivated and overlooks the fact that the tax increases for investors have been a consistent trend for the past five years. This negative rhetoric can create unnecessary resentment towards landlords and investors, who put in hard work and effort into their investments. The tax treatments for investors are not ideal, but a temporary break can help kickstart the market for everyone. It's essential to remember that landlords and investors are people too.

The recent announcement of a stamp duty holiday in England and Northern Ireland, which applies to both homebuyers and investors up to the value of £500,000, will significantly boost market activity in the short term. This temporary measure, which lasts until March 2022, will encourage more transactions as people look to take advantage of the savings before it expires. Additionally, it will make housing more affordable for many, potentially leading to increased demand and even more supply as some homeowners decide to sell. Overall, this policy move is expected to have a positive impact on the housing market in the short term.

The UK property market is experiencing an unexpected surge in activity due to the stamp duty holiday, which could prevent property prices from dipping into negative territory this year. Despite a decrease in transaction volumes earlier in 2021, the stamp duty holiday is expected to lead to a rush in property transactions, supporting prices through the end of next March. This could potentially result in a slight increase in property prices, as sellers may raise their asking prices due to buyers having more purchasing power. While this won't cause a short-term boom, it will give the market a nice nudge and boost confidence. The government's other measures, such as furlough, will continue to influence the market, with potential job losses possibly leading to price drops towards the end of the year. Overall, the stamp duty holiday is providing crucial support to the property market during uncertain times.

The recent stamp duty land tax holiday in the UK is expected to boost property transactions in the short term, but its impact on long-term property prices is uncertain. While the measure may provide stability and confidence to the market, other factors like QE, investment, and the economic situation will play a more significant role in shaping long-term property prices. The stamp duty holiday could lead to an increase in transactions before the deadline, followed by a potential dip afterwards. Overall, it's a supportive measure for the market rather than a game-changer. It's essential for those interested in property not to curb their enthusiasm but to keep a watchful eye on the economic situation and other factors that could influence long-term property prices. Our personal observations suggest that the market remains active, with people continuing to buy and sell properties despite the challenges posed by the pandemic.

The property market has bounced back surprisingly quickly after the pandemic-induced lockdown, with many properties selling rapidly and pent-up demand leading to increased interest. Despite initial expectations that the market might need support due to the quick sale of favorited properties, the market has shown signs of strength and bullishness among estate agents and developers. This increased interest predates the recent stamp duty announcements, and it's expected that transactions will continue to be strong in the coming months. A potential theory is that people have realized it's time to get on with life after years of uncertainty, leading to a surge in property activity.

The prolonged political uncertainty surrounding Brexit, coupled with the pandemic, has led to a sense of "uncertainty fatigue" among individuals, causing them to make long-awaited moves, including property transactions. This sentiment, which can be referred to as "uncertainty fatigue," has resulted in a surprising market resilience, making it challenging for businesses like ours to operate efficiently due to the lack of deal volume. Developers, too, have adopted a wait-and-see approach, and the recent stamp duty changes are expected to bring back some certainty to the market, making it easier for deals to be completed. Overall, the uncertainty surrounding Brexit and the pandemic has led to a unique market situation, with individuals and businesses alike seeking clarity and certainty to make informed decisions.

Despite the challenging market conditions, property deals are still being made, and the certainty brought about by anchoring to a price of value and offering incentives is allowing for more deals to be done in the coming months. The rental market, while localized, is also holding up well, with some areas performing particularly strong, while others are moving more slowly. Investors should keep in mind the importance of localization when making investment decisions. Overall, while the market may present challenges, there are opportunities for those who are willing to be patient and strategic.

While it's essential to consider national trends in real estate, focusing on local market conditions is crucial for successful investing. It's challenging to obtain accurate local data, but building a network and staying informed through resources like the Property Hub can provide valuable insights. A success story from a listener, Don, highlights the impact of the Property Hub podcast in helping him transition from an accidental landlord to a serious investor. The hub also offers free resources, such as a stamp duty calculator, to help investors make informed decisions.

The Property Hub team has provided a detailed market update in a recent article, which can be found in the show notes for this episode. Listeners are encouraged to check it out for a comprehensive summary of current market events and their implications. The team will deliver another market update in August, with monthly updates planned for the rest of the year. However, the regular podcast format will resume on Thursdays before then. For additional content, listeners can visit the Property Hub YouTube channel or connect with them on social media using the handle @propertyhubuk.