Jamie Johnson, CEO, FJP Investment, speculates on the near-future of the housing market.
The UK’s property market is booming. The data speaks for itself: according to the latest ONS figures, average house prices rose by 8.6% in the year to February 2021, the largest rate of annual growth seen since 2014. There was also a 15-year peak in property transactions in March this year.
The sharp uptick in prices and transactions has given rise once again to the term ‘property bubble’ The prevailing question is if, or when, the bubble will burst.
Indeed, some commentators have suggested prices could come tumbling down once the stamp duty holiday – itself a key driver of market growth since July 2020 – tapers out between now and October.
This seems unlikely. After all, it would be foolish to pretend that the current buoyancy of the property market is purely the result of potential tax savings. In truth, bricks and mortar is always the subject of high demand from both homebuyers and real estate investors. Economic uncertainty, which has been prevalent for some time now, tends merely to spur this on.
Since June 2016, the UK has had three Prime Ministers, two general elections, the EU referendum, the turbulent Brexit process, and of course, the Covid-19 pandemic. Yet the property market has fared well throughout – understandable, given it is regarded as a safe asset.
However, while it seems unlikely that the market will crash any time soon, there is no question that action must be taken to control growth and ensure the industry remains in a strong, sustainable position. State intervention, if carefully managed, can achieve this.
