The Impact of Furlough on Future Property Prices
Rishi Sunak has kindly extended the current furlough scheme which will be a fantastic help to many people and many businesses – but did he have to extend it to the 31st March!! My heart sank as soon as he gave the date because it’s the same date as the current stamp duty holiday is due to end. Now we know that the property market doesn’t move significantly just on one piece of evidence – there are 5 core areas to review and monitor and it is the combination of those 5 things that create change.
What Sunak has done here with his date matching is to ensure that two of our pieces of evidence will move in the same way on the same day: property prices will increase due to the removal of the stamp duty break and demand may fall a little as some people get made redundant as a result of the end of furlough and the combination of these two pieces of evidence added together would suggest that there will be a decrease in property prices. And that may happen.
BUT we still have the other pieces of evidence to consider and the main one, overall demand, is likely to continue pushing prices up. We also have the fact that in late March the vaccine will certainly have started its rollout and people will be more optimistic and more likely to want to move. Finally, we know that traditionally property prices start to move up in the spring as people start their ’nesting’ process and so overall I don’t think Sunak’s date choices will be too impactful. However we should keep an eye on what else is happening and monitor our 5 criteria constantly for signs of market movement.