The property market has undeniably been heavily impacted by the pandemic, witnessing a drastic change in prices and preferences. Lockdowns have led to a stagnation in house viewings, lowered consumer confidence, and instigated a decline in the market.
Prior to 2020, house prices in the UK climbed by 7.5%, which was the highest growth in six years. Furthermore, there has been an average £17,000 annual rise in UK property prices, standing at £249,000 in January 2021.
We cannot help but consider the long-term implications – will these numbers continue to rise?
There have been various changes in property preferences, such as an interest in energy-efficient properties with smart technology and fast broadband speed. However, the most prevalent change is that people are starting to move away from the city, into quieter, countryside regions.
Remote working has enabled people to complete their work from any location, meaning that there is less of an incentive to remain in cities.
Cornwall has overtaken London as the most searched for location on Rightmove, as people are increasingly recognising the appeal of a rather secluded lifestyle.
With no definitive end to the pandemic in sight, it is anticipated that people will continue to spend more time at home in the coming months or years. As such, they are searching for more space, preferably an extra room to be used as an office.
As of February 2021, the most sought-after property type has been two-bedroom semi-detached houses.
With many companies incorporating remote working policies as a permanent feature of their practice, the visible trend of movement away from cities is expected to continue beyond the pandemic.
Buyers and investors are now searching to obtain the best value for their money, and the pandemic has highlighted the price discrepancies between different areas of the UK.
Regions in the North of England and Midlands tend to provide the greatest value for money. They are especially appealing because they offer the extra space that people are seeking now more than ever.
In the north, 70% of the available housing supply is priced at £250,000 or less. This is contrasted with an average of approximately £501,000 for properties in London. The latter is known for being the most expensive region in the UK.
It is particularly telling that in 2020, London leavers purchased 73,950 homes outside the capital, the highest number in four years, illuminating the incredibly high rate of migration to other areas.
To boost buyer confidence, the government introduced a stamp duty tax holiday, potentially saving buyers up to £15,000. Since demand is likely to rise in the next few months, the deadline has been extended to the 30th of June.
The 5% deposit scheme also means that buyers will have to pay less than the usual 10%, thus allowing the government to act as a safety net. This acts as a guarantee scheme for higher-risk mortgages, and the strategy is intended to attract more first-time buyers.
Even so, it presents unique challenges – Zoopla forecasts that only 50% of sales will be complete before the end of the stamp duty holiday.
This raises two questions: firstly, will people pull out of their sales to avoid potentially having to pay a higher price? Secondly, how will these cancellations impact the market?
As vaccines continue to be widely distributed and the lockdown begins to loosen, house viewings are projected to resume, in turn producing a rise in consumer confidence.
Nevertheless, stronger buyer demand may potentially lead to increased delays in sales, and it could take up to 17 weeks to complete a property purchase.
As of the 9th of March, there are approximately 160,000 transactions still being processed.
Prices might begin to decrease in the wake of the stamp duty deadline as sales boom, but Savills forecasts that prices shall increase by 5% across the UK in 2022. However, this is expected to ease in the coming years as the rate of economic growth steadies.
Ultimately, the combined factors of more businesses recognising the benefits of incorporating virtual working as a long-term practice for employees, and individuals seeking a quieter lifestyle in which they can curate their working environment to their needs, mean that the migration from cities is expected to continue.
Therefore, the impact of the pandemic on the UK property market has been nothing short of monumental.