High demand for houses that are in short supply is causing homeowners to improve rather than move, according to Iain Swatton, head of intermediaries at mortgage comparison site Dashly.
Speaking on The kbbreview Podcast, Swatton said that, despite people wanting to change how they live, either by creating more space with more rooms or with a general refresh of their house, there is a lack of houses on the market.
This, he said, means that people who want to move up the ladder are unable to do so, and the only option is for them to upgrade what they have, rather than sell up and move.
Swatton said: “The fundamentals were always there pre-pandemic – a lot of demand and a lack of supply of new property coming on to the market, be it new or second-hand. That demand has been there for a long time, but what the Government has tried to keep things going by decreasing stamp duty, so there is an incentive that you won’t be paying it.”
The Stamp Duty Land Tax was eased from July 8 last year, depending on the property value, but rates will increase on July 1 this year. Other Government initiatives, such as the 5% deposit scheme, could help buyers get on the property ladder, however Swatton believes the supply issues will not go away.
He said: “I don’t see any of these issues changing. The supply issue won’t go away tomorrow. We have a large shortage of properties from starter properties to four- or five-bed houses. There is a massive supply issue and the demand issue is so great that it will take years to resolve.”
Swatton believes that the remortgage market has remained strong, especially in relation to those who remortgage as a way to gain equity to remodel their property. He said: “There is a drive to invest in their homes, either to create another room or to improve their bathroom or kitchen. To give themselves more space and create a more pleasant environment.
“The other side is the inevitable supply issue. If you are trying to move up the property ladder, and there aren’t properties for you to move into but you have to move – due to an expanding family, for example – then the only choice is move or extend what you currently have. People have taken the opportunity to refinance the equity in their homes to be able to change.”
Listen to the full interview on the kbbreview Podcast, listen below or on your podcast player.