There is a lot of talk of the property bubble being on the brink of bursting. But could it continue to grow instead? Having been in the property industry, I (Cengizhan Cerit) have been looking into the changes in the property market and share my thoughts below.
Questions surrounding the property bubble have become increasingly prevalent over the past few months because there has been an increase in property prices. Thanks to the July 2020 stamp duty holiday, the property market has been experiencing a boom.
It would seem that UK property prices continue to rise at their fastest rate in 5 years, according to Halifax and have grown by 8.2% in the last 12 months. This has increased the average house price to a record high of over £257,000. March also saw the highest amount of transactions in more than 15 years.
These are, of course, unusual circumstances we are all living through, and this has created housing market growth that may not be sustainable.
Will the housing market bubble burst?
With the stamp duty holiday returning to its usual rates by October 1st 2021, after being phased out, the house prices may take a dip, but not so dramatically that the housing market bubble will burst. Without a doubt, it will create less demand by those who seized the day looking to buy, sell, and invest in property while the stamp duty was in place.
It is evident that the property market was already booming before this unexpected opportunity presented itself. Therefore, we cannot say that these tax savings were the reason for its buoyancy.
This situation has enabled many people to increase their savings, which in turn could go some way to helping the housing market stay stable as many of those would be first time buyers, investors or looking to move to a bigger property. The UK has experienced turbulent times over the last 5 years, so investing in property is likely to seem like a safe investment.
How will the housing market change?
No one has a crystal ball where the property market is concerned. These have been unprecedented times, and it is impossible to say precisely how the next few months will fair due to the uncertainty of the pandemic.
The UK government will have to remain somewhat fluid to successfully deal with the development of the housing market. But, much also needs to be in place to help ensure the market remains buoyant and that needs are met.
One of the ways they are already making changes is through the planning system, making it easier to navigate with projects quicker to be signed off. Fast tracking developments will help both the public and private sectors and reduce the current housing crises we face.
During the pandemic, the government has shown how rapidly they can implement necessary changes that positively impact all our lives. This level of fluidity must remain to ensure the housing market continues to be stable and prosperous.
What does the future housing market look like?
Going forward, the regular evaluation of taxes such as capital gains, stamp duty, and inheritance tax, which all impact buyers and investors, should remain at the top of the government’s agenda if they plan to help ensure those with the ability can access the housing market.
To avoid the bubble bursting in the future, incentives should also be offered to help the development of abandoned and derelict properties which would no doubt help alleviate the housing crisis. This area is often overlooked but could be a solution to a very big problem. The Ministry of Housing has published statistics that show there are almost 650,000 empty properties in England alone.
The Covid-19 pandemic has changed the way the government operates and how we all now live our lives, in one way or another. As consumers, businesses and investors, so much of what we knew before have changed.
The question is, is the housing bubble on the brink, or will the growth continue?
Somewhere in the middle is probably the conservative answer to give. There are signs that it will not burst, and there is hope for it stabilising. One thing is for sure, that very little is for certain in the most unusual but equally curious times we are experiencing. Stability and sustainability are the watchwords.
If the government, business leaders and investors remain creative, there is hope for a stronger and brighter future within the housing market and every facet of our lives.
Cengizhan Cerit is a Turkish/British businessman. He has a long-standing and successful career in both residential and commercial property maintenance, property investment and entrepreneurship.
He leads two property management firms, SISI Property Ltd and Meden Ltd that he operates out of Ashford and London. With his strong interest in culture and business sectors, he continues to successfully develop both of these property firms.
Cengizhan Cerit is constantly updating his website with regular content covering all aspects of property investment, management and entrepreneurship.