When the initial lockdown was announced last year, it was feared that the UK property market would go into free fall. 2020 saw a frenzy of activity in the summer due to pent-up demand, and many people are now questioning whether this year’s restrictions will impact the housing market in a similar way.
The 2021 market has started off well, but we don’t expect the intensity of last year’s property market to be repeated. The market has continued to operate during this lockdown, unlike in the period between March and June of 2020, and many people who needed to move will have done so already. This suggests that there will not be the pent-up demand for property that we saw last summer, creating a better balance between available stock and the number of purchasers.
Overall consumer confidence remains low in the UK due to the many uncertainties we currently face: how and when lockdown will be eased, how effective vaccines will be and the full extent of damage to the economy, for example. As we move into spring, it is still unclear what government support will remain for jobs and the wider economy, although this should become clearer when the March budget is announced.
Despite this, markets have proved resilient since March 2020 and there has been price growth. We still have historically low interest rates and funding is available. Savings and deposit levels with banks are historically high and lots of credit card and personal debt has been repaid over the past 11 months. This all creates funds for deposits and the costs associated with buying a first home or moving house.
Younger people and foreign UK residents not yet in the housing market have been disproportionately hit by the retail, leisure and hospitality sectors closing down or being adversely affected during lowdown restrictions. Many other sectors have been able to trade and some have flourished. This means that unlike the global financial crisis in 2008/9, we aren’t seeing the same widespread negative effects across all sectors of the economy.
We expect to see steady levels of activity in 2021 but anticipate that there will be a premium for properties which are well located and offer outside and/or home working space. Students and those employed in retail, leisure and hospitality make up a large proportion of the renting population, making the reopening of the city vital. If city centres start to open up again, we will see young renters returning, which will provide a much-needed boost to the buy-to-let market.
Overall, we anticipate that 2021 will be a settled year with a regular level of activity and some growth over the year. Despite the uncertainties we’re facing, it does feel possible!
If you’re interested in how much your property is worth in the current market or want to sell soon, contact our expert estate agents today to request a free valuation. Contact us now at email@example.com or 0131 603 7333 to learn more.