Many of us have started the year 2021 with the thought, “How will prices be affected at this time?” This question generally refers to our regular living expenses, but it is true of the property market as well. What is the future of this market, especially in 2021? However, as professionals in the elite areas like the Estate Agents in Belsize Park will advise, the property market has remained resilient against the pandemic’s effects, which has left its mark on almost every individual sector. The Letting Agents in Belsize Park also share a similar thought about the current property market.
There are many aspects to consider while trying to figure out how house prices will move in 2021.
With the Stamp Duty Land Tax holiday announced last year, there was a surge in property purchases ending with an all-time high in December of 2020. This boom has continued in the first quarter of 2021. With the SDLT holiday coming to an end on 31 March 2021 (unless it is extended), there is a prediction that the prices of property will fall slightly in the second quarter of this year.
Furloughs and Unemployment:
With the furlough scheme also set to end soon, there is a likelihood of more unemployment, making it difficult for people to either move from their current homes or buy new properties. This could cause the property market to decline slightly, which may affect house prices as well.
Movement from urban to rural areas:
With the lockdown causing more people to work online, from home, it has resulted in people looking for more spacious areas outside the cities, where it will be comfortable to have a residence-cum-office, with garden space for relaxation as well. This may result in a shift in house prices – it may be falling slightly in city areas while rising a bit in the suburbs and outskirts. In the suburbs and rural areas, good transport facilities to nearby cities will be an added advantage and could result in an enhanced price if the owner wishes to sell. Also, if working online from home, there are fewer overhead expenses like commuting, which savings can add to the credit record, which could lead to affording a higher mortgage.
With the lockdowns in 2020, people did not have the opportunity to spend as they usually would have, on holidays, outings, entertainment, food etc. This has resulted in some people being able to save unexpectedly and put away a tidy sum which, in some cases, could be spent towards the purchase of a new home!
Once the vaccination programme is complete, a return to near normalcy may hopefully occur. Some predictions state that the lure of city life with its many social and cultural advantages will bring people back to the cities – both to work in offices and live in residences there, mainly if some employers restrict working from home. This could be true, resulting in a slight upward trend in house prices in the cities. Once schools and universities reopen, there is a likelihood of growth in the student population for rentals, affecting house prices. Also, most foreign buyers are interested in properties in London or other major cities. This forms quite a large portion of the property market in the cities which could tell on house prices.
Much depends on the economy, which has been deeply affected by the lockdowns, low-interest rates, furlough payments, Government benefit schemes, etc. The low-interest rates have been beneficial to those applying for mortgages even though the house prices have usually been higher. The same applies to the SDLT. If the SDLT holiday is extended, it could result in a price hike in properties.
Many experts are divided in their predictions about house prices in 2021. Some feel that they will rise slightly; others feel there may be a slight fall, while others think they will level off. One expert commented, “There is also a more positive scenario where the widespread effective rollout of the vaccines leads to a faster economic recovery, more business confidence and less long-term damage than previously expected, which would help support pricing along with the low-interest rates.”
However, with the current situation and the uncertainty of the future, it is difficult to give a definite answer. Taking into consideration all the above, there may be a rebalance between city and country house prices. However, investment in the most stable “bricks and mortar” still appears to be one of the best to be made!