What is the future of the residential property market? This is a question that has been asked rather a lot over the last year or so as various influences on the market have made themselves known throughout the course of the pandemic.
At the current time the housing market continues to be extremely buoyant with average house prices reported to be up approximately 8% year on year. If we go back twelve months, the initial impact from the first lockdown was being felt in the market. At rhw things continued to be fairly active due to the number of transactions that were already in play and the number of people who saw the hiatus in new activity as a time to prepare for the return of the market.
The Impact of the Stamp Duty Holiday
Is the continuing stamp duty holiday a prime driving influence on demand at the current time? Well, we would be daft to deny the allure of saving thousands of pounds in tax if you had the idea of moving house in mind anyway. However we are not totally convinced that the saving on stamp duty alone would suddenly cause people, who are settled, to throw caution to the wind and enter the property market. Will the end of the stamp duty holiday cause the market to crash? Well, again, there will probably be a short term drop in the number of transactions but there are other, unique, factors at play at the current time as well.
The Wider Impacts of Covid-19
The effects of the Covid-19 pandemic are myriad. The impacts on day to day lives have been huge, as the restrictions have changed shopping habits, travel, social lives and how we work. Perhaps ten years’ worth of social change has been compacted into twelve months.
In recent surveys 40% to 50% of Londoners say they have no wish to return to the office full time and are working from home. Employers (the wise ones!) are listening to what they are being told. Companies also see the cost of keeping offices going as the huge overhead it really is, so are more than happy to look at other working models that allows them to reduce costs.
The other effect of this colossal change in working habits, is that many people no longer have to live in proximity to London (or other major cities) to allow affordable everyday commuting. Hot spots in the property market have formed in places like Winchester, St. Albans, Salisbury and Canterbury, as families look further afield but keeping train links to London when needed, and eye houses with gardens and proximity to green space.
Here at rhw we think this is a trend that is going to continue. People will look to get a bigger bang for their buck from property and the traditional premium paid for housing in some areas of London will see less of a differential as compared to other areas in the south and south east as people move outwards from cities. There will probably be a similar pattern in and around places like Manchester and Birmingham, though with slightly less of an identifiable affect on the surrounding areas house prices.
What will happen with Flats and Apartments?
What this all means for sectors of the residential markets such as flats in the middle of towns and cities is less clear. They have traditionally been a stepping stone for many younger people looking to get on the property ladder.
The lack of a garden and if they are located in a non-prime location, may substantially bring down the value of new built (and existing) flats and apartments, particularly in areas that don’t see a return to large scale economic activity as we come out of the pandemic and things return to ‘normal’, whatever that means moving forward!
The impact of the pandemic on the housing market, particularly in the south of England, is profound. What people value and want from their day to day lives has changed and we will continue to see that reflected in terms of what property and areas continue to be favoured.
If you are buying or selling a residential property, make sure you instruct solicitors, such as rhw, who will ask the right questions, do all the searches, resist the pressures from agents and tell you what you need to know, whether that be good or bad!