Back at the end of 2019, unwittingly, many big predictions were made about the UK property sector and how it would evolve over the next 12 months. However, we were less than three months into 2020 when the pandemic hit and lockdown was introduced across the UK, shutting down the property market overnight.
Now, as 2021 approaches, vaccines are being rolled out and the property market has well and truly bounced back. Once again, we are pondering what the year ahead has in store.
So, what will 2021 bring? We are cautiously optimistic for the next 12 months. Here is what we predict will happen:
House Prices Will Plateau
Property sales are on the move again, thanks to initiatives like the stamp duty and Welsh land transaction tax holiday, and mortgage deferrals. The market has also benefitted from an increased demand for homes with more space and land, brought on by people spending much more time at home. In fact, according to Nationwide Building Society, annual house price growth rose 6.5% in November, the highest rate since January 2015. In November, the average house price was £229,721.
However, we predict a flatline in spring when the money-saving stamp duty holiday (and WLTT) ends. Assuming there are no more national firebreak lockdowns, major industry players Savills and PwC have similar predictions.
Of course, these forecasting reports don’t always come true. However, in some areas of the UK, prices are rather over-inflated and, at some point, the tide has to turn.
Rentals Will Weather the Storm
Thanks to the stamp duty holiday, many first-time buyers are finding it more affordable to get onto the property ladder. However, as this scheme ends soon and rental pricing tends to be resilient, we expect rents to rise in 2021.
The outlier is buy-to-let landlords, who may see a decrease in demand for student housing as many youngsters continue with digital lectures from their family homes, rather than in person tutorage.
Getting Your First Mortgage May Be Hard Work
Since the start of the pandemic, lenders have favoured buyers with large deposits as they are considered as less likely to fall into negative equity. Although there have been glimmers of hope from government announcements about 5% mortgages, we do not expect getting on the ladder will require a small deposit in 2021. As a result, generation rent is likely to continue.
Solicitors Will Be Very Busy
The conveyancing teams in Howells have been flat out since the first lockdown eased and will likely remain at this level until at least the end of March when the holiday period for stamp duty and land transaction tax ends when there may be a slight lull.
However, currently, we see no signs of the market slowing and buyer demand is very high. The number of available properties for sale is at a record low, as economic uncertainty drives people to improve and expand their current homes rather than relocate, something that could help raise property prices throughout the next 12 months.
Despite this busyness, our team endeavours to provide the best quality service possible and plans to maintain our high standards into 2021. We will do our very best to help as many buyers as possible complete before the March 31st tax deadline.
What Do You Think 2021 Will Look Like?
Are you feeling positive about the new year or are you taking things one day at a time? Let us know what you think of our predictions and join the conversation over on Facebook and Twitter.