As buyers and sellers throughout the East Midlands seek to put 2020 behind them, many will want to consider whether 2021 will prove to be a good year to move home.
Various recent announcements at a national level certainly give good reasons to be optimistic:
We're officially out! Not only that, but a deal has been struck and has been given the official stamp of approval by Parliament. The uncertainty in recent years and various questions that remained unanswered have all been put to bed and confidence has certainly been restored. While there will undoubtedly be a period of recalibration as private individuals and commercial institutions get used to doing things a bit differently, the medium and long term look positive. Due to vendors holding off over the last couple of years until some certainty had been restored to the market, 2021 may well be the year that sellers are more confident and content to move, increasing supply and giving buyers more options.
With the approval of more scientific solutions to this global pandemic, there's certainly wind in the sails of those who had previously been nervous throughout 2020. Any property market is propped-up with the underlying foundations of the 'three D's': death, divorce and debt. COVID increases these 'opportunities' greatly; death is self-explanotory sadly increases probate sales, divorce is more prevalent with the family complications and stress relating to lock-downs, and lastly debt is increasingly a worry as people have been off work/furloughed, lost business or indeed lost their income or job entirely, forcing them to release equity in their homes by offering them for sale and downsizing. Again, these factors will increase supply.
Stamp Duty Holiday
With the announcement last year of a zero threshold for the first £500,000 on your property acquisition, there is still time to benefit from this financial saving until the end of March 2021. Despite the recession in 2020, this fiscal policy ignited a huge amount of buoyancy and was the biggest factor to pushing house prices up by around 7% by the end of 2020. Many vendors took advantage of this and sold-up, going into rented so as not to rush a purchase, sitting and waiting to see what 2021 brings. While there is no official confirmation of any extension relating to this holiday, Mount & Minster predict that the current holiday will be extended, either in its current form or altered slightly to still prove more favourable than pre-COVID.
Property Market Predictions
The amount of houses currently going through the conveyancing process is positively high as we approach the current Stamp Duty holiday cut-off in March. These will continue to push forward to completion throughout January, February and, crucially, March.
An unusually large number of properties will come onto the market in the first three months of the year compared to previous years, as those wishing to exploit the confidence boost following the Brexit deal get their homes market ready.
After the first three months of the year, companies will be weaned off furlough and the other financial subsidies will be withdrawn. Bounce-Back Loans will need to start to be repaid and the true economic damage of 2020 will be more transparent. The media will report on more companies going into administration and a huge spike in unemployment, sucking confidence out of the property market and painting a picture of doom and gloom. This will discourage vendors marketing their properties for sale, decreasing the number for sale and therefore reducing the pool of purchasers for those lingering on the market.
This is when it will get interesting. Spring and early summer are when the majority of homes come-up for sale. With the reduction in the number of properties available to buy and prices presumably attractive with motivated/desperate sellers accepting lower than average offers, this will be the catalyst to those sitting comfortably in temporary accommodation (having already sold in 2020 or early 2021) with no chain and cash to pounce on the opportunities available to them. However, with low supply and an increase in demand, we will very quickly see bidding wars and early reports of the market picking-up. The bottle-neck of potential vendors sitting and waiting for some early signs of positivity will then rush to get their homes on the market.
It is our prediction, therefore, that the first quarter will be steady. The second quarter will be quiet which will suddenly lead to a spike in the third quarter when the market will pick-up significantly, running through into the final quarter and ending-up with property prices at between 3-4% higher by the end of 2021.
We also predict that areas around Grantham, Newark and Lincoln will perform better than others with the continued exodus of people from London relocating to our area as the trend of working from home will continue. With the main line to London proving fast and reliable, the occasional journey will prove to be a huge benefit to our area, pushing prices upwards thanks to deeper pockets from the south.
If Stamp Duty is extended as is, or favourably restructured compared to previous years, then you can expect the same trends as above, but at a far more favourable level, with house prices increasing over 6%.