At the beginning of 2020, the UK market looked strong. The UK property market forecast in 2019 predicted 2020 to be a positive year for the housing market.
In January, it was reported that UK house price growth was at its highest level in two years, with record-breaking growth seen in December.
The UK property market forecast for 2019 had faced a level of uncertainty, but following Boris Johnson’s election in December, 2019 ended on a high note for the country’s housing market.
Savills predicted that the UK would see an average property price growth of 3% in the Midlands and 2.5% in the North West.
The future looked bright for the year moving forward, with ongoing optimism that as a Brexit deal was finally agreed on, the UK would be in a great place by the end of the year.
No UK property market forecast for 2020 could have predicted that the country, and the world, would be hit by a pandemic that would affect everyday life, the economy, and the housing market.
Here are some of the key things that happened to the UK property market throughout 2020.
A Property Market Slowdown in March
After coronavirus was officially named a pandemic and UK cases rose, the UK went into a full lockdown at the end of March and fears loomed over whether or not the property market would survive.
The following months were a rocky period for the UK housing market in 2020, with decreased market activity due to a lack of property viewings and financial worry.
There were, however, highs and lows during this period.
In April, it was reported that the average value of asking prices was down by 0.6% compared to March, which was the largest monthly fall reported in two years.
However, from a year-on-year perspective, Halifax data showed that house prices in the UK had actually increased by 2.7% in April compared to April 2019.
By May, another drop was reported by Nationwide, with a house price decrease of 1.7% between April and May.
While this looked like a bad sign, many people, particularly property investors, used this time to take advantage of the best buy to let deals.
Many property developers started offering below-market discounts and deals such as assured rental yields for an extended period of time as a way to entice investors.
House Price Recovery
By July 2020, short-term drops in property prices had come to an end, with a ‘surprise’ 1.6% rise in house prices.
This meant that the annual rate of growth for the UK market in 2020 had grown to 3.8%, which is higher than the 1% growth that Savills originally predicted in their UK property market forecast for 2020 at the start of the year.
This rise in property values and market activity was fuelled not only by the reopening of the property market, but also the introduction of a new stamp duty tax holiday.
The stamp duty tax holiday, announced by Rishi Sunak in July, meant that homeowners and buy to let investors were able to benefit from significant tax savings.
The tax threshold for those buying a buy to live home became much higher than usual, allowing anyone purchasing a property worth less than £500,000 to avoid stamp duty tax altogether.
For buy to let investments, investors will need to pay 3% tax on property with a value up to the same amount.
This price growth continued into August with record highs, and by October, prices were 5.5% higher than they were a year ago.
This marked the biggest increase in property prices for over four years, and restored a lot of faith in the market moving forward and encouraged more optimistic house price predictions for 2021.
Changing Buyer Demand
One of the most notable things to happen to the UK property market over 2020 was the shift in people’s attitudes and requirements when it comes to their home.
Due to the lockdown, more people than ever before have been working from home in 2020, with numbers increasing from 5.7% of workers in January and February to 43.1% in April.
With so many people spending more time in their homes, the UK property market saw a number of buyer and renter trends.
One of the most common trends for homeowners was a rise in demand for more rural properties.
Wealthy homeowners have reportedly been leaving London and moving to more rural countryside locations in what has been dubbed the ‘race for space‘.
According to Knight Frank, house price growth was seen for all country houses with a 2% increase in the three months to September 2020.
A lot of homeowners now favour access to green space and a more serene environment away from the hustle and bustle of the city.
For younger age groups, however, such as young professionals and students, a city location is still desirable, but renters are now seeking different qualities from their rental accommodation.
Rental Property Trends
Covid-19 has also affected the rental market, and one particular quality that many people now look for when finding a rental property is a garden or outdoor space such as a balcony.
For those who are working from home while living in the city-centre, having a balcony or shared/private garden is a great way to get some fresh air without having to travel or walk to the nearest park.
Properties like our upcoming One Baltic Square property, with a large communal garden area, align with this trend perfectly, while other properties offer spacious balconies.
Another quality that more renters are looking for is a high-speed internet connection to facilitate working from home, along with space for a desk area.
Modern new-build properties are perfect for this, as they tend to come with high-speed Wi-Fi, and often have dedicated or built-in desk areas.
While 2021 will likely see fewer people working from home due to a gradual return to normality, many UK workers are now more inclined to work from home full-time.
A recent poll revealed that more than half of workers are reluctant to return to the office, with many people wishing to spend some days in the office and some days at home.
With this in mind, it’s likely that these trends will continue for some time, and savvy investors should seek out buy to let properties which incorporate these desirable features.
