14 Jan

Market Update - Wrapping up 2020, Opening 2021

2020 was peppered with numerous twists and turns with potential disaster around the bend of each upcoming month, that soon turned to each week as restrictions and new information began changing rapidly. But through it all, the property market hasn’t done too badly compared to other industries that were unfortunately hit very hard.

Naturally disaster struck in more ways than one when Covid-19 began spreading it’s girth globally. We went into a fully fledged lockdown in March, and the property market as well as construction was included in the halt. But as the market opened up again, we were allowed to commence viewings and boom, the market took a quick upturn. When the second and third national lockdowns hit, the property industry was allowed to stay open. We could continue viewings, construction could carry on and people could move home providing they all stuck to government guidelines. As a result, demand rose for sales throughout the year and it has been quoted by ARLA that demand for housing was up by 55% compared to 2010.

To help this along, Chancellor Rishi Sunak announced a stamp duty holiday in July 2020 which was a temporary relief due to end 31st March 2021. There has been talk about extending the holiday but as of writing, this hasn’t come to fruition and it has been announced so far that the holiday won’t extend. But it had the effect of boosting the sales market, with many people taking advantage of it (rightly so). Another aspect adding to demand is cheaper money, the Bank of England lowered its base rate to 0.1%. Mortgage deals were good and approvals were also up. Mortgage holidays were also brought in, while it affects ones credit score, it is still a lifeline for those who needed it.

Last year shone light on the way we live and work. With the stay at home orders, people were working from home, some for the first time. Offices closing meant a massive shift for many people and as such, people considered the function of their homes more than ever. A work space was needed, as well as relaxing spaces, and as a bonus some outdoor space. Those with children at home saw the need for more space whilst working from home. This drove the rising demand for houses instead of flats, and a ‘London Exodus’. People didn’t see the reason being in the city when they were just stuck indoors at home working, and this was to be the norm for the foreseeable future. The same could be done outside of the city for far less money.

Rental Market
The rental market however is a different story and varies across the country. We saw a drop in international and national students who were moving away from home and those who did move, ended up being locked in their rooms when national lockdowns hit. A number of students went home and stayed there, but of course they were still paying for accommodation, a very tricky situation to end up in. As for the professional market, many lost their jobs and a very large number went onto the furlough scheme. Some tenants used the situation to avoid paying rent even if they had the money and other tenants were truly hit hard by job loss. There was also an eviction ban put into place, landlords couldn’t evict their tenants unless under specific circumstances, and a 6 month eviction notice rule was also put in place, valid until 31st March 2021.

Without a crystal ball, predicting what will happen and the knock on effects is near impossible but now in the throes of the third lockdown, the industry is still open but there are signs coming of potential disruption. Talks are in place for stopping property viewings amidst rising case numbers; petitions are in place to extend stamp duty holiday, but at the time of writing, government has indicated this will not be extended; the eviction ban is coming to an end, but may be extended to protect tenants; the students are unlikely to come back this academic year; furlough ends in April, will businesses and jobs be sustained after this; the vaccine is being rolled out across the country restoring some confidence. The tipping point is end of March, beginning of April, but things can turn in dramatic enough fashion next week.

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