Is the housing market doomed? Truss us, it’s not.
We’d be lying if we said it was easy to write about the economy right now. For example, Liz Truss was the Prime Minister when we started writing this article. Then, in yet another Tory resignation, she was gone after only 44 days in power. And even before the resignation, we were being hit with more U-turns than a 17-year-old on a driving lesson. It can be a minefield to understand what’s happening and get our heads around what happens next. We’ve collated the facts, what we know for sure and what the experts predict is to come. So, we bring you another episode of… Less Scaremongering, More Straightforward.
Is a housing market crash on the horizon?
It’s important to remember that scary headlines get clicks and the more clicks these news sites get the more they get paid from advertisers. So, you must be vigilant in where you get your news from, i.e., a credible source and not a biased tabloid just looking for a mass reaction. Until now, the housing market has survived the global pandemic, the European war and, at this point, countless UK Prime Ministers.
The facts are that the latest House Price Index showed the average price paid for a home in Scotland in August 2022 was 9.7% up on August 2021. And although this is down on the two previous months, people are still buying. We’re seeing the long-term effects of the coronavirus pandemic on the economy and how we function in society. Making it harder than ever to make predictions, because realistically we’ve never been in this situation before. It’s widely believed that people saved up during the lockdowns so they could afford to move into bigger and better properties. Our general way of living and priorities changed too. For example, many of us now prefer to work from home, which means home offices are the norm.
“People still need a roof over their heads. It’s as simple as that. We are still seeing a shortage of stock coming to the market with so many homeowners reluctant to put their properties on the market for sale until they have secured their offer on their next purchase. With fewer properties on the market and a ready pool of property buyers searching for their dream home or next property investment, the low supply and high demand will help to ensure that property prices remain stable.”
Last month we reported on monthly mortgage costs going up due to shooting interest rates. To keep these down people are likely to put more down as a deposit. But this means they won’t have as much wiggle room to pay above and beyond home report value. However, this doesn’t necessarily mean we hit a standstill. It just means the trend of seeing homes go for excessive amounts over the asking price will be gone. Those who took themselves out of the competition because they either couldn’t afford to go way over home report value (and/or they couldn’t be bothered with the hassle of fighting 6 other families for a 2-bed semi) will be back in the game.
We’ll give it to you straight. We had this paragraph written before Liz Truss resigned. To recap, it basically said ¯\_(ツ)_/¯. So, it’s been deleted, and we’ve replaced it with why you’ve been seeing this term in the media and what it means. What you need to know for starters is that in Scotland Stamp Duty is actually called Land and Buildings Transaction Tax (LBTT). It’s a tax that you have to pay if you are buying a property that exceeds £145,000 in value, or £175,000 if you’re a first-time buyer. You’ve been seeing it in the headlines because Liz Truss’s government changed the cut-off rates to try to encourage spending, in England and NI. There will be no changes to LBTT (or stamp duty whatever you want to call it) in Scotland. The rates are set until 2023.
There you have it. A little breakdown of what’s what with no scary “we’re all doomed” hook.