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In 2020 the demand for properties for sale increased substantially, with this increase in demand we saw house price growth across the UK. Annual house price inflation was +3.5% across all regions. At a more local level, in Nottingham, the annual price inflation was over 5%, compared to last year. Our article – House prices are soaring in Nottingham – showed that the average price for a property in Nottingham is £3159,100.

After Summer this year the demand for houses has slowed down, but it is still 34% higher than it was at the same time in 2019. The stamp duty holiday has helped incentivise people to invest in property, and there are still a high proportion of sales to be completed in 2020 Q4, and 2021 Q1 before the stamp duty charge is reinstated in April 2021. The graph below shows the trend in housing sales over the past year.

Factors which will shape the property market in 2021

It is hard to state with certainty what will happen next year to the property sector as there is still so little known about how the Coronavirus pandemic will affect us in the UK as we move into the New Year. Below is a list of factors that we need to be taken into consideration over the next couple of years as these will impact on the property market.

• The Coronavirus vaccine has been developed and is being administered to the local population. It is anticipated that the Government will begin to ease the lockdown restrictions. However, this may take longer than we expect, so we need to keep an eye on how this pans out.
• The Government support given to businesses and the general public this year should help to improve economic growth in 2021. However, unemployment levels are rising, and this may continue into 2021.
• As the Brexit negotiations continue, it is hard to know whether a deal will be agreed before the deadline on 31 December 2020. Companies that import and export goods to the EU need to comply with new rules starting in January 2021. If a deal is agreed, it will help to keep goods flowing and help to improve economic growth.
• Buying chains have been affected in 2020 as lenders reduced the availability of mortgages to first time buyers with small deposits. It is anticipated that as the economy picks up in 2021, lenders will return to higher Loan to Value (LTV)
• The mortgage deferral scheme has been extended to March 2021. This was to support people struggling financially during the pandemic. It is anticipated that lenders will continue to pursue forbearance policies in response to increasing arrears rates over 2021.
• Next year the Government may impose higher rates of Capital Gains Tax which will have an impact on private property investors and people buying second homes. It is hard to know when any policy changes like this will come into play, but a delayed implementation will undoubtedly help the property market in 2021.
• The pandemic has caused many people to assess their lifestyle and working practices. Working from home has become the norm; this trend may continue in the coming years. This will impact on choices people make about their homes, especially those that would like more space. This could result in a continued rise in property sales over the next two years.

In summary 2021 is being seen as a transition year as we continue to adjust to the impact of the COVID19 pandemic, and the economy starts to recover.

In 2021 the predication shown in the Zoopla Insights report (October 2020) suggests that just 4.5% of homes to transact, compared to a 60-year average of 7% and a high of 12% in 1988 (a homeowner moving every eight years). A combination of demographic, social, policy and economic factors have all acted to reduce the liquidity of the housing market to a level that cant go much lower in our view.

We are specialists in the letting, management and investment of residential properties in Nottinghamshire, so if you are a landlord or property investor contact us by calling 0115 704 3163 (Nottingham) or 01623 277115 (Mansfield). Alternatively, you can email us via our contact us page -click here.

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