What’s Next For The Property Market?

Following a year of chaos – not to mention the chancellor’s budget at the beginning of March – plenty have been left wondering what’s next for the UK’s property market. From stamp duty holidays to rising house prices, here, some of the industry’s most-qualified professionals answer some of the key questions…
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Let’s start by going through some of the most recent developments for the housing market…
“The biggest announcement [to come out of the March budget] was a widely trailed extension to the stamp duty holiday. Purchases up to £500,000 will remain exempt until June, while those up to £250,000 will pay no duty until the end of September, when the thresholds return to pre-pandemic levels. This will be a relief for buyers struggling to hit the previous March deadline but is likely to create similar anxiety for those hoping to meet the new June and September cut-offs.

The second major announcement was a guarantee scheme for lenders offering 95% mortgages. The details look very similar to the Help to Buy mortgage guarantee scheme which ran between 2013 and 2017, and probably gave a small boost to higher loan-to-value lending. The new scheme may have a similar impact but is unlikely to dramatically alter the shape of the mortgage market, which has been dominated by lower loan-to-value mortgages since the global financial crisis.” – Sophie Tonge, Ed Hampson & Chris Buckle, members of the residential research team at Savills 

Does any of this have any particular bearing on house prices? 
“[According to research from Nationwide] house prices rose by 0.7% in February, which more than counteracted January’s 0.3% fall. We expect modest value growth to continue this year as demand remains high and, as the budget showed, the government remains committed to supporting the housing market. The two key measures [outlined above] confirmed will support continued price growth and high-activity levels.” – the Savills team

“We predict house prices may soften slightly, but will stay resilient and stable in 2021, particularly for three- and four-bedroom houses. We are likely to see prices in some areas rising, and there will be regional variations. Some of our big cities and town centres, however, may see a fall of around 3-4%, particularly for flats where there is an oversupply in town and city centres, with more developments already in progress.” – the team at property expert group Romans

What about in London specifically?
“Activity has already picked up more quickly than expected, with more £5m-plus sales last year than since 2016. That tells us that buyers believe in the future of London as a global city and supports our expectation that values will recover quickly as the city reopens for business and international travel resumes.” – Frances Clacy, residential research analyst at Savills

And what about renting – any specific trends you’re seeing there?
“The average UK rent increased 1.3% over the year to January, according to the Office for National Statistics. Rents grew the most in the South West and East Midlands, up 2.2%, and were weakest in London, up 0.8%.” – the Savills team 

“Rents are easier to track as they can’t outpace wage growth, and we expect to see a steady increase of 1-2% this year. Much like house prices, this is likely to be lower in bigger cities, where we are seeing less demand, and higher in suburbs or on the outskirts of cities.” – the Romans team

“We don’t expect rents to drastically increase during 2021 due to the overall economic landscape. Renewal rates will remain high, but the quality of tenants and good length of tenancy will hold far more weight with landlords this year as they will want to avoid issues with rent arrears owing to the current ban on evictions as well as lengthy void periods during the pandemic.” – Andrew Dewar, joint senior partner at Burns & Webber

Do activity levels look good right now?
“Activity levels started to pick up over February, with the slow start to 2021 failing to last. Numbers of sales agreed and instructions to sell both increased towards the end of January and stayed high during February, too. Demand has been consistently stronger than supply, which has worked to support the growth in prices, while surveyors have reported that new buyer enquiries increased more than new instructions to sell in January. Meanwhile, TwentyCi data shows more sales agreed than new instructions to sell since the start of the year, and while the number of completed transactions in January fell by over 25% month-on-month, that’s still 22% higher than the 2018 to 2020 three-year average.” – the Savills team

“Concerns of a cliff edge for the housing market at the end of March have dissipated, partly due to the tax deadline extensions, but also because the already-high level of buyer demand caused by the lockdowns has continued to surge since the start of the year. This demand will be further boosted from April by the new government guarantees enabling lenders to bring back 5% deposit mortgages. While it’s not the perfect time to buy for some people who have been adversely affected by the pandemic, the record buyer demand indicates that now is the right time for many. Record low interest rates and the new focus on what your home needs to offer after several lockdowns have led us to the greatest excess of demand over supply in the last ten years. This kind of market is good news for those who are looking to put their home on the market as the traditional Easter selling season approaches, too.” – Tom Bannister, director of property data at Rightmove

So, is now a good time to move?
“Improved availability of higher loan-to-value mortgages for those with deposits of 10% or more are already increasing, which will support first-time buyers over the next 12 months. And while the momentum built up at the end 2020 is expected to support a strong start in 2021, it’s expected that older, equity-rich, long-time homeowners will continue to take a growing share of sales. 

Overall, it should be said that the Covid-19 situation remains incredibly volatile, and while the pandemic has resulted in an increase in activity within the housing market, it is not immune to economic forces and rising unemployment, so we have to watch carefully how the next few months bring for all of us. What is absolutely vital for anyone thinking of moving is that no matter what your motivation might be, make sure you seek solid, expert advice. Early planning and preparation and having an expert, professional estate agent to assist you throughout the entire moving process has never been more critical to ensuring your move in 2021 is a success.” – Andrew Dewar

What are potential buyers looking for these days?
“Starting 2021 at home in another lockdown has prompted many to go in search of more space, looking for gardens and separate areas to make working from home or to home-schooling children easier. With the commute to big cities still not returned, we are likely to see a continued ‘escape to the suburbs’ this year in order to upsize to these larger properties. We expect the desire for properties, both to buy and rent, in suburbs to continue to grow, and we are already seeing reduced demand for flats in city centres. 

Rightmove reported Lightwater in Surrey had the highest uplift in buyer searches in 2020, and that fits the pattern we expect to see across the country this year. Areas around one hour away from big cities, with good transport links, facilities and lots of green space are where both house buyers and renters will increasingly seek homes. These are areas such as Egham, Uxbridge and Woking outside London, while further north we are seeing growing interest in Warrington, Crewe and Loughborough.” – the Romans team

Would you call it a buyers’ or a sellers’ market?
“In our view, this is the strongest spring sellers’ market in the past decade. Simply put, it’s the greatest excess of demand over supply over the past ten years, which pushed up the average price of property coming to the market by 0.8% (+£2,484) in March. Plus, the number of potential buyers enquiring about property in the month is at a record high and is 34% higher than the same period a year ago, which was itself an active market before the first lockdown. 

With sales already agreed for almost two out of three properties on agents’ books, buyers are eagerly waiting for fresh choice to come to market. Now also marks the start of the traditional spring selling period, with the number of sales agreed for the first week in March already up by 12% on last year despite the shortage of available stock. We’ve seen a daily average of over 7m visits to Rightmove in February, which is 40% up on February 2020. It means there are early signs that more owners are now deciding to market their properties, spurred by incentives and lockdown easing.” – the Rightmove team

Any final thoughts on where the market might be headed in 2021?
“So many sales have been agreed in recent months that we now face a serious shortage of homes available for sale. There are lots of reasons why many homeowners have hesitated to come to market during the first two months of the year, but these do now seem to be dissipating. A recovery in fresh supply gives more choice to prospective buyers, many of whom are also potential sellers, which in turn will encourage more of them to come to market, and therefore ease the upward pressure we’re seeing on house prices.” – Tom Bannister  

“The property industry has had to adapt quickly following so much unexpected change to the housing market in 2020 and this has set the industry in good stead for 2021. Despite economic fluctuations, the housing and rental markets will stay buoyant – especially following support from additional government measures, such as the extended furlough scheme and extension of the stamp duty holiday. The pandemic has changed how we all think about our homes and where we live, possibly forever.” – the Romans team 

 

For more information on buying, selling and moving to a new house, visit Savills.co.uk, Romans.co.uk, BurnsAndWebber.com and Rightmove.co.uk

 

*DISCLAIMER: Anything written by SheerLuxe is not intended to constitute financial advice. The views expressed in this article reflect the opinions of the individuals, not the company. Always consult with an independent financial advisor or expert before making an investment or personal finance decisions.

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