What will the property sector look like in 2021?
Daniel Chard is partner and head of property at Bird & Co
Housing Demand to Plateau
After the property sector was forced to halt everything during the first lockdown, the second half of the year saw demand for online conveyancing services bounce back dramatically.
We expect this surge to continue throughout Q1, due to a number of reasons.
For starters, the huge back up of prospective buyers and sellers after the spring 2020 market cut-off should keep demand going through early 2021.
Buyers have now had months more to save up a viable house deposit, and both sellers and buyers will want to get the ball rolling.
What’s more, low interest rates, resulting in cheaper mortgages for some, are spurring things on.
Couple this with the stamp duty holiday continuing up until 31 March 2021, demand is still soaring.
After these incentives diminish come Q3 and 4, we forecast a plateau later in the year.
House Prices to Increase
Many believe that the end of the stamp duty holiday, combined with the end of the Furlough Scheme on 31 March 2021, will cause house prices to decrease.
That said, some think the increase in prices will continue into early 2021, and decrease come 2022. They believe that the peak in pricing will coincide with the usual spring boom in house sales, and continued growth will simply be subdued.
We are more inclined to agree with the latter. Low interest rates, as well as cheaper mortgages available for some people, will prop everything up until Q3 and 4.
Then, after this initial demand, and the stabilisation of the market post-COVID, we can see a decrease potentially following suit from 2022 onwards.
Continued Struggles for First-Time Buyers
Statistics show that home movers are set to overtake first-time buyers with home purchases once again. As the year moves to 2021, we can only predict that these struggles will continue for a number of reasons.
Firstly, continually rising house prices, as well as sky rocketing rent, low wages, and unemployment, makes it near impossible for first-time buyers to save a deposit.
What’s more, despite low interest rates, a withdrawal of high loan-to-value mortgage products disproportionately affected first-timers, who typically require bigger mortgages to cover the lack of a hefty deposit.
We can expect this struggle to continue if the picture isn’t changed.
What’s more, new equity loan scheme, which is aimed at supporting first-time buyers with new-build purchases, may not have the intended effect.
It certainly seems like a great opportunity, but the country is still lacking affordable housing for many, so we doubt it’ll help.
Then, we have the stamp duty holiday, which has only really benefitted those already on the ladder, further increasing the disparity between first-time buyers and others.
Finally, young people have been affected most dramatically by unemployment this year, further compounding the issue.
What Are Your Predictions for the 2021 Property Market?
Evidently, there’s no clear picture of how the property market will look in 2021. It all depends on how the government deals with the pandemic in the new year, as well as the success of the vaccine.
It’ll also depend on how quickly unemployment rates get back on track.