The expectations for the 2020 property market, pre Covid-19, had significantly different ideas and predictions for the year. Initially, the outlook appeared strong, with the so-called ‘Boris Bounce’ contributing to the property price growth at the start of the year. According to the Bank of England, there was the highest levels of mortgage approvals in 6 years. This presented a promising start to the year, with levels of confidence and stability returning to the U.K. housing market in response to the election.
However, after the initial outbreak of Covid-19 in March, the property market effectively froze. As Covid-19 infection rates increased on a global pandemic level, the market saw a significant dip, with a 56% reduction in number of properties sold in UK during the midst of the first lockdown as buyers and investors awaited a government response.
However, the market made a comeback and has experienced a boom in response to temporary factors provided by the government; mainly due to the Stamp Duty Holiday. Last July, the threshold was increased from 125,000 to £500,000, allowing home buyers to get on the property ladder at a lesser expense. As a result, residential property transactions received a 15.6% increase in sales in August, and buying house enquiries were up 75% in comparison to last year’s figures. These figures outline how these changes in stamp duty land tax significantly injected momentum into the market on a large scale and supported the property market in remaining buoyant in these uncertain times.
As we enter the festive period, the property market typically experiences a seasonal slowdown, however, figures indicate demand for property has remained high. Average house prices are expected to be ahead 3.3% for December in comparison to the same month in the previous year. This can expectedly be in response to the rush of housing deals before the Stamp Duty Holiday ends on 31st March 2021, fuelling a sharp increase in transaction volumes. This coupled with the recent news of a vaccine in the New Year will no doubt boost confidence in the property market as we head into the new year.
Research has identified discrepancies between the north and south of England in terms of property demand across the country. According to RICS, figures in October indicate a +46% increase in demand for new buyer enquiries, and demand in lettings continued to increase despite the second lockdown.
As a nation, the market boasts a positive outlook, yet this is contrary when acknowledging the property market figures in London. It has been reported in the Residential Market Survey October 2020, that -55% of respondents forecast a decline in rents over the next three months in the capital. This conveys the current changes in the London property market in response to the global pandemic and can be explained by an emerging market shift as more and more people are considering relocation as a result of working from home. The demand for versatile space that accommodates living and working has seen people flock to the northern regions to benefit from more affordable rents, while maintaining a London salary.
As the stamp duty holiday is due to end in Q1 of 2021, Hometrack expects a record 100,000 additional sales before the end of March. Talks concerning an extension of the ‘holiday’ in order to support the high volume of transactions and stimulate the housing market further into the new year have been taking place, though such changes have not been confirmed or materialised in the chancellor’s most recent spending review in November. This raises awareness of the potential slowdown in 2021, however based on the resilience in the market as witnessed this year, it remains a very reliable investment opportunity for the long-term.
At Alesco, we believe in investing in confidence, and to consistently move forward even in challenging times, to ensure you achieve your property investment ambitions.
To find your next property investment opportunity, location should be the primary focus. Manchester has recently been named the best city for buy-to-let investments in UK, with 31% of the city’s population in the rental market. The ROI is impressive too, offering below average property prices, yields of up to 10.1% and assured capital growth over the long-term. At Alesco, we offer a number of buy-to-let opportunities in Manchester and have recently launched X1 Michigan Towers. This is a luxury new development of 1-3-bedroom apartments and 2 bed townhouses, with stunning views of Salford Quays and Central Manchester.
For more information on the opportunities available, contact our team today.
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