Google Question one of four: Why is the UK Property Market booming?

Why is the UK Property Market booming?

We use a great website to pull in the most frequently asked questions on Google about the UK’s property market and this is the most frequently asked.

It is clear to see that UK house prices, in most areas, have gone bananas!

Why though?

In our opinion there are three reasons:

1. Interest rates for mortgages are at an all time low. In short, it is cheaper to borrow money to buy a property than ever before. People can now pay more and it costs less. This is one of, if not the, most impacting reason the property is currently going crazy!

FACT: It was cheaper to rent a property than buy a property with a 15% deposit in the second half of 2020. Now rents have risen massively due to a shortage of supply and mortgage interest rates are so low its cheaper to buy a property with a 5% deposit than rent the same property.

2. Loan to value ratios are as high as they have been for over a decade. Mortgage lenders will offer people 90/95% mortgages meaning people need lower deposits than last year to buy a property.

What is interesting is that banks are increasing their lower loan to value deals (60%-75%) and keep dropping their higher ratio deals like 90% and 95%.
This is odd because it normally works the other way around. Why? We think it shows confidence in the market next year and expectations that property prices will rise. We also think inflation rates are giving the banks the thumbs up to increase mortgage rates for people likely to be re-mortgaging and who have not looked at their fixed rates for 2 or 3 years and tend to just pay it the increased amount.

3. Stamp Duty Land Tax Holiday. Yes this helped to get people moving and a lot of people saved money in 2020 through to September 2021. That has now passed and still prices are increasing. Why? The SDLT holiday has created a shortage of property for sale and demand is still super high!

Will demand slow? Maybe a little but we still have crazy low costs to borrow money, lifestyle changes due to covid-19 and inflation levels show the public have money! We also have ‘lockdown babies’ starting to be born which will trigger an increase in demand for family homes especially those in highly regarded school catchment areas. Yes – Lockdown babies will impact the property market and indeed the price of nappies…

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