The last few years have marked a difficult time for the housing market. The uncertainty over Brexit has hung like a shadow over sentiment. It has resulted in some buyers reluctant to make a move until the outcome of the trade talks are known.
However, despite sluggish growth initially, a marked increase was seen in house prices as the general election in 2019 approached. Fast-forward almost a year, and despite all the challenges that 2020 has brought, house prices have hit a five-year high.
But will this hike be sustained or will the bubble burst as 2021 approaches? Here’s a closer look at what it’s all about.
Peak in Prices and Approvals
With the housing market effectively frozen for several months in 2020, the resurgence since it reopened has been striking. In October 2020, house prices in the UK hit a five-year high (expected to be confirmed by the ONS) with the number of transactions also at its highest point since 2016. Mortgage approvals have dramatically risen too with 97,500 agreements, the most recorded since 2007.
All of these indicators point to a buoyant market, at least in the short-term. Experts believe that this price hike and surge in demand is a combination of pent-up appetite and the effect of the stamp duty holiday announced by the government. With the potential to save thousands of pounds, many buyers have thrown caution to the wind and are keen to complete before the concession is due to end in March 2021.
Demand for the Country
Working from home has been historically an unusual arrangement in the UK, a situation replicated across Europe. In 2019, there was only around 5% of people working from home, a figure which has remained stable since 2012.
2020 has shown that working from home can be a very effective arrangement and moreover, for some, it’s entirely preferable. Many of the world’s global employers are leading the charge for change with companies such as Twitter allowing all employees to work from home whenever they want.
So what does this have to do with the UK housing market? A switch to working from home means that buyers are no longer tied to commuting routes and are looking for larger houses to spend more time in.
Described as a race for space, the number of offers accepted outside the capital hit an all-time high, with lush areas such as Cobham, Esher, Ascot and Weybridge among the most popular locations in the southeast.
Leafy commuter towns have seen their numbers swell, with larger country houses experiencing huge demand. The trend has been replicated all around the country, with areas such as Worcester being flooded with buyer interest.
What Next for 2021?
If the statistics are to be believed, the housing market is in a very healthy position as 2020 draws to a close. Despite financial pressure in other industries and a fragile economy, the housing market has remained resilient and notched up significant increases in the last year.
Whether these will be sustained throughout 2021 is less certain, as the impact of Brexit bites and the stamp duty holiday comes to an end. Most housing buffs believe that 2021 will see more modest increases, with more remarkable growth to come between 2022-2024.