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14 Apr 2021

Will COVID-19 Leave a Lasting Impression on the Property Market?

Will COVID-19 Leave a Lasting Impression on the Property Market?

Record High House Prices

House prices hit a record high average of £254,606 in March. Data released by Halifax shows a 6.5% increase in property prices in March 2021, in comparison to March 2020. The new government support schemes in relation to COVID-19, have spiked levels of demand in the property market. Consequently, since the start of the national lockdown, prices have risen by £15,000.

Russell Galley, Managing Director, Halifax, said: “Following a relatively subdued start to the year, the housing market enjoyed something of a resurgence during March, with prices up by just over 1% compared to February. This rise – the first since November last year – means the average property is now worth £254,606, a new record high.

Savills predict house prices will increase by 4% this year. The growth will result from the low interest rates, and the government schemes announced during the Spring Budget. In addition, forecasts show over the next 5 years prices will rise a further 21.1%.

 

Strong Market Predictions for 2021

Demand for properties will remain strong throughout 2021.

The vaccination programme is rolling out effectively. As of April 13, over 32 million people will have received their first dose of the covid vaccine. Around 7,656,205 people have already had their second dose. The UK has successfully vaccinated 39,846,781 people since announcing the vaccine programme late last year. In addition to this, lockdown restrictions are easing, and relaxed social distancing measures will soon follow. Ultimately, this will boost consumer confidence in buying and selling properties.

Currently, social distancing and home schooling has put a hold on house viewings. Those with children or working from home are finding it difficult to conduct viewings. Whereas others are not confident in opening their homes to potential buyers amid the pandemic. However, as more people are vaccinated, we will see a rise in the number of home viewings carried out. Moreover, housing stock on the market will increase, reducing the drastic supply and demand imbalance.

 

Changing Lifestyles to Leave a Lasting Impression on Market

The pandemic has undoubtedly caused a change in lifestyles and will leave a lasting impression on the housing market. Home buying trends are reflecting this as only 15% of people are looking to live close to a place of work. Furthermore, this number has decreased by 12% on the year before. This is mainly due to the rise of home working. We predict this lifestyle change will reflect in buyer’s property requirements going forward as many businesses will proceed with a mix of home and office based work. Buyers will search for properties with more space, where they can work from home easily.

At the start of the year, a dip in market activity was predicted as the stamp duty deadline drew near with the furlough scheme following close behind. This would have caused a spike in unemployment and would directly impact market activity. However, an extension to the schemes will ensure market activity continues strongly throughout the year.

 

Delays are not Discouraging Home Movers

Home movers are facing delays due to the current restrictions and limited market activity. According to a survey by Savills, 63% of respondents planning to move homes had their plans affected. A substantial percentage of people are still going forward with plans to move despite the delays. Alternatively, 15% were less devoted to moving due to the delays.

The desire to relocate continues to grow with the changing priorities of buyers. The UK has faced three consecutive lockdowns with tight restrictions since March 2020. This is causing buyers to search for properties close to communal gardens and outdoor spaces. Over 55% of respondents are prioritising searching for a home close to a park, this is higher than the year before. Data shows a 13% increase in comparison to March 2020. Therefore, properties close to outdoor spaces are acting as a magnet for investors as people continue to hunt for more open areas.

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