How will the UK Housing Market be like in 2021?

The UK property market and property prices in the United Kingdom are expected to stay strong and stable in 2021 even after such an unpredictable year, resulting in a positive year for housing.

UK housing market conditions: Growth or decline?

Take a look at the average house prices in the UK from the year 2007 to 2020.

Source: PropertyData

Let’s dive into some factors and predictions:

1. How has COVID-19 changed house prices in the UK?
2. Brexit VS property market
3. Preferable houses for the buyers this year
4. Homeowners to embrace let-to-let market

1. How has COVID-19 changed house prices in the UK?

Property markets in England, Scotland, Wales and Northern Ireland have been open despite the lockdown measures and pandemic. The buyers could move their home, whereas the real estate agents have been conducting in-person house viewings.

When the government started temporarily cutting stamp duty, the growth in property prices began to be seen from the month of July of last year. The range of the cut is different from one country to another.

After the stamp duty announcement, if the buyers could move before the deadline ended, they could save up to £15,000 in tax.

However, the figures kept fluctuating –

• The average price of a house in the UK fell by 0.5% monthly, which later on rose by 7.5% yearly in January (based on asking prices rather than sold prices), as per the Land Registry’s UK House Price Index.
• According to Rightmove's index, the average asking prices rose by 0.8% monthly and 2.7% yearly in March.
• Based on mortgage lending, Nationwide’s index reported a 0.2% monthly fall and a 5.7% annual rise in prices in March.

The deadline of the stamp duty cut got extended after that. Putting a stop mark to all the thoughts related to declining prices, this extension has reduced the downside risk and is predicted to push the UK housing market to grow in 2021.

2. Brexit VS property market

Although there was an uptake related to Brexit, the property market has not been affected by it. The data of JLL’s Residential UK report says that it is not interrupting multifamily investment. They expect the house prices in central London will grow 15.3% over the next 5 years.

Nevertheless, the country’s economic condition due to the pandemic can result in job uncertainty. It is more likely to impact house prices in the longer term, not in the short term. Yet, with the government’s good decision and perpetual measures, the situation can be handled swiftly.

3. Preferable houses for the buyers this year

The report from Rightmove shows that the search result by the buyers was more seen in Lightwater in Surrey. It indicates how people are getting more attracted to the properties in the suburbs, more than flats in the centre of a city. The lockdown and fear of human contact made people desire open space.

As a result, areas around an hour away from big cities, with good transport facilities, demand both house buyers and renters.

4. Homeowners to embrace let-to-let market

Going after the trend of finding open space, many homeowners are expected to become both landlords and renters in 2021. Homeowners are to decide whether to let out their remaining property and rent a larger one to get the spacious home they want as soon as possible, with a better budget. This is called the let-to-let option, which was followed after the 2008 financial crash.

This year as well, this option is going to be popular amongst the homeowners.

2021 is a positive year for housing in the UK, and this promises great returns.

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