This time last year, Covid-19 was on our radar, we knew what it was, but we certainly didn’t know the impact it would have. As we take a look at the residential property market it is fair to say that the industry, thanks in part to some government support, remained surprisingly resilient. Now as said government support is set to be stripped away at the end of March, we focus on the year ahead and ask the million dollar question – What does 2021 look like for the property market?
Property prices and sales
Whilst we can all agree that property levels and transactions went into overdrive last summer, driven by pent up demand following the 7-week market closure, along with the announcement of the Government Stamp Duty holiday. This acceleration of the market is still driving a usually quiet winter as people scramble to complete before the Stamp Duty deadline.
‘Highly uncertain’. A term we are set to hear for the foreseeable when looking at the economics surrounding the housing market., Experts expect house prices to cool further, but not collapse in the short term. The consensus is that the market will dip slightly in the second quarter following the end of the Stamp Duty holiday while people try to adjust to the new normal which is still uncertain at this point. However, hopefully with the easing of restrictions and the return to normality, transactions will look to return back to normal levels.
There are conflicting opinions from economists, agents and lenders with some saying they expect the see a 5% fall in prices by the end of 2021 and other predicting an increase up to 4%. We have already seen this happen across London where the average house price exceeded the £500,000 mark for the first time and believe that prices will stay broadly consistent throughout the year despite the market uncertainties. Market conditions coupled with a change in consumer spending behaviours and lifestyles will play a vital part.
Lifestyle trends
The global pandemic has created a shift in buyer’s mentality and priorities which has in turn created a series of surprising and much anticipated lifestyle trends.
With restrictions due to remain in place until Spring 2021, these trends are set to not be a fad, but will become part of the way we live our lives forever. Flexible working and an increased focus on wellbeing and work life balance are driving change in the sector.
Notably, Rightmove data revealed that studio flats were the most popular choice for renters in January 2020 but this changed to two-bedroom houses in May 2020. The survey also found that 19% of first-time buyers were more inclined to relocate to a rural area. Statistics show that demand for outdoor spaces, larger homes to allow more space for home working and moving to the countryside have been the top three shift in priorities for buyers in the last year and with flexible working patterns set to become the new normal, we do not see those trends changing back to the pre-covid days any time soon.
Lettings and BTR
The lettings market has had a strong year driven by domestic market looking for a lifestyle change in 2020. But with more concerted effort put into the Build to Rent sector which has attracted huge institutional investors and with international demand hopefully back once travel restrictions are lifted, we see the lettings market growing back in confidence in 2021.
International Demand
International interest has always been strong in the UK property market especially in London but in 2020, the Covid travel restrictions and Brexit deal uncertainties slowed progress. Now that Brexit is behind us and there are new systems in place to carry out viewings and sales virtually, we predict that international interest will bounce back stronger than before.
Reforms and changes
We cannot end our predictions for the industry without mentioning the Build, Build, Build agenda and the impending changes and reforms that will shape the future of the industry.
The leasehold reform which has finally happened after 40 years shows real commitment from the Government to advance the industry and ensure that a Better Britain is truly being built to ensure that home ownership becomes a reality for more people.
Let’s hope that the Stamp Duty will also be given the same consideration and that real and positive changes will happen in the industry in 2021.
The property industry is evolving very rapidly, and we are here to help adapt and evolve with the changing times with our communication strategies and services.
Get in touch with our property team via emma.hughes@becg.com, if you’d like to discuss how we can help your business further.
