How the property market rebounded from one of its biggest challenges in history …
Paul Cosgrove, Director at Finlay Brewer, reflects on how the market has dramatically shifted since the pandemic, with a change in buyer needs from the homes and areas they choose to live in …
The first day of January 2020 was one filled with optimism and anticipation towards a new dawn in the property market. The Conservatives had secured a majority in Parliament following the December 2019 election and an outline exit agreement had been agreed between the UK and EU, which lifted the fog that had been hanging over the London and wider national property market for a number of years.
Whilst the reported Boris Bounce of January and February was not quite as fruitful as reports at the time suggested, we were seeing a steady increase in activity during a period that is typically one of our quietest. This all led into March where we secured a number of big ticket sales and a feeling of positivity had flooded the market. Looking at the wider picture overall in Q1 2020, property prices in London were up 6.6% compared to the same period in 2019. However, the positivity had drained within the first two weeks of March when the country was plunged into a national lockdown and the Government announced the immediate freezing of the property market.
It is this period, the first national lockdown, that has shaped the market since and will continue to do so into this year, 2022 and possibly beyond. The sudden and catastrophic change to people’s lives made them instantly question their living situation. Within days those that had been happy to sacrifice living space to squeeze into a central London apartment close to their place of work and the various hospitality, entertainment and leisure amenities fast forwarded their plans to move away from the city and into the suburbs.
Following the reopening of the property market in June the pent-up demand focused largely on buyers looking for more space, be it bigger homes with significant outside space or people looking to increase the size of their apartment. Studios and one-bedroom flats suffered, as people wanted homes that were suitable for home working, as well as offering enough room in anticipation of future lockdowns.
As one of the leading independent local estate agents in Brook Green, Brackenbury Village, Shepherds Bush and Acton, we benefitted greatly from our office location which is based in Brook Green, renowned for its large Victorian homes with good-sized gardens, as well as its close proximity to green spaces and transport connections into prime central when needed. A large number of our initial enquiries at the beginning of June were people that now no longer needed to be in the thick of the city and wanted more from their home.
We believe that this has become more than a lockdown trend and is instead a full step change in the market. Across London and the UK the majority of transactions have been for larger homes, as buyers respond to the change in lifestyle – working from home is likely going to become a permanent fixture for many companies, whilst the Government refuses to rule out future lockdowns, so people are planning ahead and adapting to the ‘new normal’.
It was this pent-up demand for more space that helped the property market recovered and whilst our transactions were down c.20% compared to 2019 we beat our ‘worst case scenario’ targets following the lockdown.
The wider UK market saw house prices rise by 6% by the end of 2020, which is in stark contrast to the grave predictions of price falls between 8-10% amid the market freeze in April.
Various economic factors, such as the SDLT holiday and low interest rates, alongside the change in people’s living habits helped the market stabilise, recover and eventually prosper. However, it is the loss of these factors that could also prove to be the derailing of the property market in 2021 if we’re not careful.
Starting the year off, the uncertainty around Brexit has finally been lifted following the trade agreement that saw the UK leave the EU with a workable deal. Interestingly, the positivity surrounding the release of various vaccines at the of 2020 and into early 2021, coupled with the distraction of a new lockdown, has softened the immediate impact the adjustment period of the new Brexit terms could have had on the market. Travel is already limited due to restrictions and the majority of properties can now be viewed virtually, as well as in person following the guidelines, so there is a real sense of wanting to get on with things during this period.
This is exemplified by a strong start to 2021 by ourselves and a number of other agents. In the first week back we secured one of our biggest ever sales, whilst various other central London estate agents have announced record breaking deals to kick the year off. The feelings of positivity are being allowed to creep in once again, however, it is wrapped in a straightjacket of caution and trepidation. The big factor in people’s buying decisions will be the space they can get for their money, we believe modernised homes that are voluminous and need very little work doing to them will be the most sought after.
Moving forwards into the year it will be interesting to see what the Treasury does with property taxes and how interest and inflation rates change, if at all, and the impact that has on buyer appetite.
Following the year we had in 2020 it is impossible to make any solid predictions, however, the rebound we saw following the lockdown proves just how versatile the property market is. For the time being at least space, both internal and external, are going to play a big part in market activity, I’m fascinated to learn if that is still the big driver by the end of 2021.
To contact the team at Finlay Brewers call: 0207 371 4171 or visit: www.finlaybrewer.co.uk