Given the breadth of the chaos caused by the Coronavirus pandemic, it wouldn't be fair to single out a particular industry or sector that has been hardest hit.
However, hospitality and housing are unquestionably reeling from the impact.
For UK movers, this year has been a significant challenge, with a continually changing scenario and guidance. This has meant that sales, investments and moves have both been on indefinite hold, and then conversely moving at the speed of light to take advantage of tax reliefs offered to alleviate the strain.
Let's review what the current situation is, what impact the pandemic has had thus far on British property values, and what we can anticipate in the months to come.
Property Prices in 2020: In Summary
While lockdown round one saw a mandated pause in the property market, the second time around, conditions are less stringent.
This means that, despite all the unknown variables, the market is less likely to take as significant a hit in November as it did in the spring.
Here's what we have seen so far:
- From 27th March 2020, the shut down of the housing market saw 373,000 sales suspended.
- Initially, this impact was detrimental, particularly to the landlord investment market. In May, rentals in London were 20% below average.
- GDP dropped a staggering 20.4% between April and June, with no certainty about when markets would reopen. Support schemes launched, including mortgage repayment holidays to support workers on furlough, or unable to work.
- House prices dipped by 3.2% between the same months, reflecting a 0.1% decrease year on year.
- Following the announcement in July 2020 of a stamp duty 'holiday', with the threshold rising to £500,000, the housing market rapidly bounced back.
- In October 2020, Nationwide reported annual house price growth of 5.8% - the highest in five years.
Why Has the UK Property Market Bounced Back So Quickly?
There are multiple reasons behind this rapid resurgence.
Firstly, hundreds of thousands of purchases and sales were postponed between April and July - and therefore, the backlog cleared in a much shorter space of time than usual, seeing highly elevated trade figures across the summer.
Secondly, the government announced the stamp duty holiday. This was a prime driver for investment purchases - and although second home duties remain payable, people buying UK property now can save up to £15,000 on a new purchase.
Thirdly, lockdown brought about significant changes to the way we work, live, and socialise. The restrictions throughout the earlier lockdown were challenging for city-dwellers, particularly those living alone, in urban developments, or without access to outside space.
This mass exodus from the cities has driven rapid growth in the more rural property market, as home working and distance communications make it less essential to be resident in the city.
Forecast Market Recovery for the Property Sector Post-Pandemic
The important thing here is to be a little pragmatic, and while it might seem excellent news to have seen such a swift bounce back, it isn't necessarily here to stay.
Price forecasts vary significantly between sources:
- Deutsche Bank predicts falls of up to 23%.
- Zoopla estimates prices will remain stable in 2020, and drop in 2021.
- Savills and Hamptons International forecast 0% growth in 2021.
- The Centre for Economic and Business Research predicts price drops of 13.8% next year.
This all rests on the likelihood of further economic recession, and when the backlog of movers dwindles out.
Most buyers are looking to complete their purchase by 31st March 2021 to take advantage of the stamp duty holiday - but it is estimated that as many as 325,000 investments will fail to meet the deadline, possibly falling through altogether.
Given the disparity between expert predictions, it is impossible to know with any certainty what the 2021 property market will look like.
It may be that when the current government funding support comes to an end (now in March 2021) coinciding with the stamp duty reinstatement, sales will fall off a cliff with financial manoeuvrability combined with increased investment costs pouring water over the growth of this year.
Our advice? Proceed with caution.
If a house move is top of your list of priorities, the larger a deposit you can offer, and therefore the lower Loan to Value ratio you are seeking, the more competitive the interest rates on offer.
And if you've found your dream property? Now might not be the cheapest time to buy, with growth in property values over the last few months - but it is worth weighing up the potential stamp duty cost to determine whether a quick investment now could save a significant expense in a few months.