12th February 2021

How will 2021 perform for the Housing Market?

Goodbye 2020!

2020 has been a year that many people wish to forget. Many industries were brought to their knees, and companies all over the UK are still struggling. The property industry both suffered and thrived throughout the first year of the pandemic. The end of 2020 saw the UK housing market reach record highs, and the market had grown at its strongest rate in 4 years by November.

The increase in this market was primarily due to the stamp duty holiday, and the demand for more space to work from home, mixed with the fact that it had been very difficult to move during the first lockdown we had.

So, with such a boom in the property market late last year, what does this mean for the property market in 2021?

Stamp Duty

In July 2020 a temporary stamp duty holiday was announced, this is due to end at the end of March 2021, although there are currently discussions in Westminster about this as we speak so keep an eye on the news! Stamp duty is an additional fee that is paid when buying a house. Dependent on the price of the property this price will usually vary between 2 and 12%. Being able to save sometimes thousands of pounds whilst purchasing a property is obviously enticing for buyers, and this is why we have seen such an increase in sales.

It is, therefore, likely that the mini-boom in the property market will continue until the beginning of April should the stamp duty holiday expire, and after that cut-off date, well things may begin to slow down once again. However if the stamp duty holiday is extended, we are likely to see a busier market once again.

Unemployment

Whilst house prices soared last year, unfortunately so did unemployment. The entertainment, retail, and catering industries all being hit particularly hard. Many companies had to lose staff or closed completely, and of course a vast amount of people were furloughed. The longer lockdown continues, the rate of unemployment will most likely rise.

Both lack of jobs and lack of money will soon mean that there are fewer people able to afford to buy a new property. We could even see an increase in people renting should the unemployment issue continue to grow. Remember that whatever the state of the economy, people will always need somewhere to live.

Do not forget Brexit

Whatever your stance on Brexit, it has happened!

It is difficult to gauge exactly how much Brexit has affected the housing market since the referendum in 2016. With such uncertainty and longevity surrounding the deal, it did not appear to have too much of an impact. However it appears that other than last year, statistics suggest that it took longer to find a buyer after 2016 than before.

At the moment, it is still difficult to know how Brexit will affect the market in the short to medium term. As mentioned earlier, little has changed seemingly due to the referendum, and this looks as though it will continue for the time being. Brexit could of course change anything and everything at a moments notice so it is important to keep it in consideration.

Where you live

Location always affects the value of a property. Here in the North East and elsewhere as you know, more people are working from home, and also mental health, families and more outdoor space for instance are huge triggers for the decision to move.

If you are working from home then you are likely going to need more space, especially if there are multiple people in the household. However if your company is likely to continue offering remote working as an option even after lockdown, you no longer need to worry about being too close to the office. As such, rural areas have become more popular once again.

As there are not many reasons you can leave the house at the moment, remote properties have increased in popularity. It can also be expected then, that rural areas will continue to rise in value and urban ones will potentially slow down or even fall.

So whilst it is impossible to say exactly what will happen to the property market throughout 2021, speculation would suggest that the mini-boom we are currently experiencing will continue until the stamp duty holiday ends, then we are likely to see a potential downturn for the rest of this year as we all gather our thoughts.