Lockdown
It seems a very long time ago now but I’ll never forget the early days of lockdown when almost overnight, the entire housing market ground to a complete halt for three very long months for new instructions. With no viewings allowed and no property valuations being made, mortgage offers couldn’t be progressed so we had dozens of hugely frustrated clients who weren’t able to move house as planned.
This stalemate continued for what seemed like forever. The situation was compounded by the fact that the property market in England opened back up a good six weeks before it did here in Wales, leading to confusion and yet more frustration for people who were desperate to sell or buy their homes.
The market reopens
As soon as the lockdown lifted, however, activity picked up at an incredible pace. Announcements were made temporarily lifting stamp duty in England and Land Transaction Tax in Wales, prompting many to bring forward their plans to move. As people had had the time over the first lockdown to really consider what they wanted from their properties, we saw an increase in buyers looking for home office space, bigger gardens and in more rural locations
Since then, despite all the worries around the economic outlook, housing activity has continued to soar, with RICS reporting four consecutive months of increased new buyer enquiries since June. Here at Harding Evans we’ve certainly been busier than we have been in years, with the month of September seeing a 63% increase in the number of instructions compared to the same month last year.
However, property transactions are taking longer than usual. Delays are caused by many factors; busy lenders and local authorities, inundated conveyancers, sudden changes in client circumstances, backlogs at the Land and Probate Registries and delays in the divorce courts. The list goes on! Currently, the national average transaction time is a staggering 18-20 weeks but here at Harding Evans our current average time from file opening to completion is between 12 and 13 weeks.
House prices have continued to increase too, with ONS reporting an increase of 7.6% in the twelve months to November 2020, representing the strongest rate of growth since June 2016.
First time buyers
The rising prices didn’t seem to deter first time buyers in 2020 though. Quite the opposite in fact. It appears that the crisis has made them even more determined to follow their home ownership dreams and save more to get a foot on the housing ladder. Recent research[i] revealed that three in five people said that buying a home was more important to them now than it was in March. Over a third expected to buy their first home sooner due to the pandemic and 44% said they had been able to save more for their deposit in recent months.
Holiday homes
Through the year, we also saw more people investing in holiday homes, both for their own long-term stay-cation plans for future breaks as well as for the investment potential to be had from the holiday rental market now that more holidaymakers are looking for UK getaways. Google searches for holiday homes increased by 141% in the past year with seaside destinations topping the list.
So what does the future hold?
Incredibly, the UK housing market has so far managed to escape from the economic crash that is affecting many others sectors. But while it may seem rosy for now, I think it would be extremely naïve to expect that to continue through 2021.
I’m confident that the market will remain buoyant into the first few months of the New Year as tens of thousands of buyers try to complete before the deadline for the stamp duty/LTT holiday in March.
However, with more and more homeowners being forced to sell up, it’s likely that this mini-boom will come to an end sometime in 2021. According to trade body, UK Finance, a massive 492,000 of the 2.6 million home owners who took mortgage holidays earlier in the year have had to switch to interest-only mortgages instead of restarting full repayments and a further 140,000 are on mortgage payment deferrals. With experts at RICS warning that the market doesn’t even need half that number to impact house prices, the short-term future doesn’t look so rosy after all.
A large proportion of houses on the market have discounted prices and sellers are being forced to reduce prices to secure quicker sales. And with unemployment forecast at 2.6 million by the middle of 2021, there is little doubt that the property market will slow down next year.
The vaccine news is certainly promising and is raising hopes of an economic recovery. It will hopefully assist in getting businesses back on their feet and being able to function close to pre-Covid levels. With various parts of the country going in to lockdown at different times, different rules in Wales and England, and traditional working from call centres not possible, we hope that lenders will adapt to help speed up the process through improved service times and responses. Likewise, if local authorities can digitise their records, we will see significant time savings for all transactions.
A change in working practices may also continue the trend of people looking to move to different areas and keep the property market ticking over. The ability to work from home, which is now actively encouraged by most employers, will make people more willing to move to new areas but good broadband connection will be top of the shopping list! With the requirement for office space potentially diminishing, this may also be an opportunity for local authorities to develop strategies to allow more residential sites to be developed within city centres.
Clearly, that won’t all happen overnight so I think homeowners need to brace themselves for a potentially tougher second half to 2021 and do all they can to ride out the dip in house prices that may well be coming.
If you are looking to buy or sell your property, give one of the friendly, experienced Residential Property team at Harding Evans a call on 01633 235145 or 02922 676819 or get a quick conveyancing quote at www.hardingevans.com
[i] Yorkshire Building Society, October 2020
