It is amazing to see that, despite the pandemic, the average UK house price ended the year 7.3% up on the previous year (Source: Nationwide). And there is still a lot of heat in the market - with record property portal activity on Boxing Day being 70.5% up on last year! (Source: Zoopla). You might expect that tougher Covid-related restrictions and our formal departure from Europe at the end of last month would have seriously damaged the property market, yet the opposite seems to be true.
Certainly, the government’ SDLT (Stamp Duty) concession, which can save buyers up to £15,000, has played its part in increasing both transaction volumes and prices. As estate agents, we have been run off our feet for months, and any break over Christmas was short-lived, as activity has continued unabated.
Some commentators have suggested that over 250,000 sales agreed could potentially fall through or, more likely, have price reductions if they don’t complete before the SDLT concession is withdrawn on 31st March. There has also been the suggestion that mortgages might become increasingly difficult to obtain if lenders are worried about employment stability.
However, many people who have suffered, or will suffer, redundancy are likely to be in lower income jobs in sectors such as hospitality, leisure and retail. They are less likely to be homebuyers than those who might not have been disadvantaged by the pandemic, in sectors such as technology or logistics.
Whenever there is change, the opportunity for prosperity is not far behind. In 2021, we’ll have immense change-related opportunities, not just following Covid, but also related to Brexit. While builders, homeware- and garden-suppliers are busy providing for people resigned to spending more time at home, many manufacturers are turning their attentions to making products in the UK that had previously been imported from Europe. Brexit will no doubt also continue to cause instability in the stock market for some time to come. When this has happened in the past, investors have flocked to bricks and mortar as a proven and reliable safe haven for their money.
And because property is so safe, despite the various uncertainties, we expect demand from homebuyers to continue right through this year. We’ve all been prompted to reflect on life recently, resulting in many people deciding to move to somewhere better-suited to a new type of lifestyle. They have realised that working from home is not only viable, but is also preferable, so moving to a more enjoyable property, where there is space to work from home, is now very much on their agenda.
Macro-economists point out that both Brexit and the Pandemic will turn out to be just minor blips on their charts in the future, with some predicting a return to pre-pandemic levels within 18 months. The fundamentals of the economy remain very sound and it is this, more than any other influence, that supports the property market. We are after all the fifth largest economy in the world! That Stamp duty Concession was helpful, but it would not have prompted people to move unless they actually had a strong desire to do so based on market confidence and their personal lifestyle preferences.
Most pundits are predicting modest growth almost immediately. So if you are planning to sell and then buy a higher value property than your current home, we suggest you act quickly and put yourself in a strong position as both seller and buyer. There are more dynamics in play now than ever before and it can be confusing. So for up-to-the minute property buying, selling or investment opinion, please feel free to call us for some straight-talking good advice from the experts to help get you moving – forward! Wishing you good health in 2021!
Nav Sharma FNAEA
Ruxton Independent Estate Agents & Valuers LLP