With most of our commercial contracts involving home building and our own property development arm growing, we’re always interested to see what’s going on with house prices.
So, what has 2020 thrown up for the housing market?
Well there’s only one way to put this – it’s definitely been a bit of a surprise.
In the early stages of the pandemic, all predictions indicated that, given the uncertainty around our lifestyles and livelihoods, house prices would be likely to fall across the UK.
Surprisingly, the opposite has happened and the market appears to be experiencing some kind of mini-boom! Just look at these statistics from industry specialists Rightmove and Zoopla:
- This August, over 81,000 property sales were recorded, up 15.6% on July (and having such a competitive market meant one in eight properties sold at or above the asking price).
- House prices recorded during October this year were 5.5% higher than a year ago, the highest annual increase in over four years.
- Buyer demand is up 34% on a year ago.
Why, why, why?
We all know that supply and demand is what drives any particular market and it’s clear to see from the above statistics that pricing is basically keeping in sync with increased demand – but that doesn’t explain the puzzle of ‘why’?
Here’s a couple of possible explanations:
The stamp duty holiday – During the initial phase of the first lockdown, activity in the housing market understandably fell but buyer demand didn’t really go away (essentially it was just put on hold). Easing of restrictions mid-May meant buyers started to re-engage with the market and then July brought the government’s decision to extend the stamp duty holiday up to £500,000. The result – a frenzy of activity as buyers and sellers looked to take advantage of the tax savings.
Lockdown lifestyles increased demand – Another reason is that the restrictions associated with lockdowns caused many people to re-assess their living circumstances and priorities, the result of which was more people deciding they wanted to move. Seeking out larger properties, relocating to rural communities, and working-from-home eliminating the need for a daily commute have all been cited as factors.
Whatever the reasons, the fact is that, during a year like no other, the resilience of the housing market has truly stood out. Demand is high and therefore house prices have defied all odds and continued to rise.
Going forward
Working out what will happen next in the UK’s housing market is difficult. If 2020 predictions were wrong, who knows what 2021 will bring!
There are still too many uncertainties on the cards – for instance, when/how the longer-term economic implications of the pandemic will kick in; or whether there will be potential complications around house building after the Brexit transition period ends.
We’re not going to try making any predictions here but will do the only thing we can right now – continue to watch with interest.
24.11.2020
Feature image: Tana888/Shutterstock.com
