Will the UK’s post-COVID property market boom in 2021?
- Stamp duty holiday has triggered significant growth in the UK housing market
- Liverpool crowned top hotspot for UK property with average prices 15% higher
- UK property market expected to flourish post-COVID, with low mortgage rates supporting housing prices
- Experts identify new property trends heading into 2021
Real estate agents have come under enormous pressure to complete housing sales over the last six months due to ferocious demand in the UK housing market, and experts are now predicting a boom in property searches on Boxing Day.
Despite the chaos and disruption caused by the coronavirus pandemic, strong demand for UK property has stood out in the darkness of the broader UK economy.
Initially, the property market collapsed amid the first nationwide lockdown. However, stay-at-home orders, low mortgage rates and Chancellor Rishi Sunak’s stamp duty holiday appear to have spurred people to purchase new property.
What were house hunters prioritising in 2020?
Several property trends have been identified among first-time buyers and those already on the property market, with estate agents reporting increased demand for property with large outdoor spaces, office space and strong broadband connection.
These trends have also seen strong housing price growth in areas outside of London, with many people now happy to live further away from their place of work to secure a better quality of life.
CEO of Moneywise, Tom Scarborough, said: “Lockdown has had a notable impact on where people want to live and what they want from their homes, while also fuelling house price growth in towns beyond the commuter belt.”
According to recent data from the Land Registry, Liverpool ranks highest on the UK’s top property hotspots in 2020, with average property prices in the area rising by an annual rate of 15%.
In the year to October, housing prices in Liverpool jumped up by nearly GBP 20,000, from GBP 130,223 to GBP 149,938.
Housing market activity is expected to remain strong heading into 2021, while the stamp duty holidays remains in effect until March-end. Still, the future of the property market beyond that remains mostly uncertain.
Some of the pressing questions being raised are: Will buyers see housing prices fall if the economy deteriorates further? Will the COVID-19 vaccine help to stabilise the property market in 2021? Will the property market collapse when the stamp duty holiday ends?
Will the UK housing market continue to flourish in 2021?
Although a V-shaped recovery has taken place in the UK’s property market, there could be some turbulence in the second half of 2021 as the conditions that have fuelled market recovery wind down in the first half of the year.
Overseas buyers will be subject to an additional 2% in stamp duty on homes they purchase in the UK, which could deter foreign investors.
The UK government’s furlough scheme is also scheduled to terminate a month later in April, and the risk of mass unemployment and lower wages could weigh on activity in the housing market.
However, leading property website and real estate portal, Rightmove predicts housing prices to continue increasing in 2021.
According to Rightmove, property prices will rise by 4% next year, irrespective of Brexit, the coronavirus pandemic and whether the government chooses to extend the stamp duty holiday.
The UK-based company noted that average asking prices for property in the UK surged by 6.6% in the year to December after the country set a new national record for average property prices coming into the market the month before.
Currently, average housing prices in the UK are GBP 319,945, and while demand is expected to slow down in the second quarter of 2021 following the termination of the stamp duty cut, cheap mortgage rates will continue to prop up prices.
However, TV property guru Kirstie Allsopp has expressed her disapproval over the increase in property prices, stating that it further highlights the divide “between the haves and the have-nots.”
That being said, she and fellow TV personality, Phil Spencer advise first-time buyers and those seeking to downsize to take advantage of the low mortgage rates and stamp duty holiday while they can.
With more people working from home, the duo has also acknowledged increased demand for space to work from home and the importance of robust broadband.
Will there be new trends in the property market post-COVID?
According to new data published by housebuilder, Redrow, which polled 2,000 UK adults to understand their views and desires on their homes post-pandemic found that office space and more reliant broadband is a top priority for buyers.
James Holmear, Redrow’s group sales director, said: “Strong internet connection is now seen as the fourth utility” due to the increased number of people working from home. For most broadband has been a saving grace during the pandemic, allowing them to “maintain both their professional careers and social lives.”
Mr Holmear noted that “poor connection can have a negative impact on the quality of life and in some cases, lead to isolation and loneliness.
Other property experts believe the UK property market will operate at two-speeds in 2021, whereby some regions will outperform others as seen for the majority of 2020.
Most expect cities such as Liverpool, Manchester, Birmingham and Leicester will continue to display strong housing price growth, whereas southern regions will see a decline in property market activity.
While most are optimistic about the outlook of the UK housing market, there’s bound to be significant change after the Christmas period with the UK departing the EU’s single market.
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