Although it’s been said quite a lot this year, 2020 has been an unprecedented year in history and one in which the housing market has proved its resilience.
That is according to managing director of Fine & Country UK Nicky Stevenson, who says that house price growth has strengthened over the last year across the mainstream and prime markets, with a record number of sales in progress for this time of year.
She continues: “It’s hard to believe that this time last year the country was waiting with bated breath to see who would occupy Number 10 for Christmas, after the third election in just five years. Europe was top of the agenda. A year of Covid-dominated headlines has seen Brexit slip down the priority list, although with final ties set to be cut from January 1, it’s back on the agenda.”
Stevenson adds that the impact of the Covid-19 pandemic has affected how we use our homes significantly. ‘Garden’ was the most popular search term across the housing market throughout 2020, followed by ‘detached’, ‘rural’ and ‘secluded’ in Zoopla’s top 10 list.
“With nearly a quarter of the workforce currently working from home, and many predicting that a full-time return to the office is unlikely, additional space continues to be a priority, with larger homes seeing the most significant rise in interest,” she comments.
Further analysis shows activity across the housing market this autumn has set new records. The number of sales agreed was up 50% in October with properties sold in just 49 days – some 15 days faster than a year ago, according to Rightmove.
According to HMRC, an estimated 105,000 transactions completed in October – the highest monthly figure since March 2016, and up 8.1% year-on-year. Meanwhile, gross mortgage lending is at its highest level since the housing market entered lockdown in March, data from the Bank of England shows.
What’s more, NAEA Propertymark reports that the number of prospective buyers per branch reached an average of 451, a record for the month of October. The Dataloft Demand Index and Rightmove both reported an uptick in demand during the first week of Lockdown 2 across England.
Stevenson says the Chancellor’s spending review on November 25 ‘made sober reading’ against the backdrop of a resilient market. Covid-19 has caused the economy to shrink by 11.3% this year, with public borrowing at record highs and unemployment anticipated to reach 2.6 million (7.5%) by the middle of 2021.
However, continued government financial support and the extension to the furlough scheme to March will help many, and the introduction of a successful vaccine programme will undoubtedly aid economic recovery.
As it stands, the Office for Budget Responsibility forecast the economy will grow by 5.5% over 2021 and 6.6% in 2022. The country is set to return to pre-pandemic levels by Q4 2022, and inflation and interest rates are predicted to remain low.
But what does the New Year bring?
“Rightmove asserts there are currently 650,000 more home purchases in the pipeline than a year ago as buyers seek to make the most of property taxation savings before the March 31st deadline,” says Stevenson.
“Forthcoming changes to capital gains tax and for overseas purchasers in the form of a 2% surcharge from April are also impacting activity across the capital. The unanswerable question at present is what will happen to the market post-March, with many calling for an extension to the stamp duty holiday due to the number of sales caught in the conveyancing process.”
“A consensus of independent forecasts suggests price growth will soften over the course of 2021, with stronger capital growth expected to return in 2022,” she concludes.