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2020 recap of the UK housing market: Resilience through uncertainty

The UK housing market has seen its fair share of ups and downs over the past 12 months. However, through it all, the sector has shown its strength and resilience. 

Looking back at the housing market over the course of 2020, there’s a lot to be positive about despite the challenging year. Whilst the Brexit debate remained quiet for most of the year, the COVID-19 pandemic dominated the headlines.

The property market started off with a bang at the beginning of 2020. Then, to help curb the spread of COVID-19, Prime Minister Boris Johnson announced a national lockdown in March. The property market remained closed for two months. And building sites closed temporarily as well.

Once the sector opened back up in May, pent-up demand started to be released. In July, Chancellor Rishi Sunak announced a temporary stamp duty holiday, which is in place until 31st March 2021. This spurred activity and led to a property boom in the ensuing months.

Certain areas became subject to local lockdowns, and a three tier system was then introduced in England in October. There was a second lockdown during the month of November. However, this lockdown was much different than the first time around. The housing market remained open and people were allowed to move and undertake property viewings as long as social distancing measures were followed.

A more stringent three-tier system was then introduced at the beginning of December. And now, the COVID-19 vaccination program has started, giving many people hope and confidence about the future.

UK housing market demand and property prices

House price indices and sentiment trackers have shown that the market remained strong and resilient. The UK housing market performed better than expected throughout the year. The sector even rebounded faster than its decline post-Covid.

During the past few months, housing demand has been at record highs, which pushed house prices up. Throughout 2020, the number of prospective buyer was the highest it has been over the past 10 years, according to ARLA Propertymark. Additionally, demand for housing was up by 55% compared to 2010.

The housing market typically faces a seasonal slowdown at the end of the year. However, the second lockdown reaffirmed people’s desire to move, which has led to the busiest December in over a decade.

Changing home priorities

New buying and rental trends have shaped the housing market this year. Property priorities have changed as more professionals have been working from home. Many are looking for dedicated space for an office and high-speed internet.

With people spending more time at home this year, many are looking for more space, especially when it comes to outdoor space. Location priorities have also changed. Many are now prioritising living close to public parks. Landlords who own properties that meet these changing priorities have seen more demand from tenants.

Mortgage availability and interest rates

Mortgage product numbers fell dramatically in March when the property sector closed up temporarily. However, mortgage availability has improved strongly over recent months. Lenders are continuing to gain confidence. Mortgage approvals have even hit a 13-year high. This growth has allowed homebuyers and investors to purchase homes and take advantage of the stamp duty holiday.

Interest rates have been at record lows throughout 2020. Earlier in the year, the Bank of England lowered the base interest rate to just 0.1%. Mortgage costs and interest rates are on the rise, but there are still competitive rates on the market. And the current average rates are still below the average at the start of 2020, allowing buyers and investors to secure better deals.

Helpful government support

The government provided help and support to the housing market to help the sector recover. The stamp duty holiday was pivotal in the housing market’s recovery, which has resulted in a property boom. To help get the country’s economy back on track, Boris Johnson also pledged to “build, build, build” and has put a focus on investing in homebuilding.

Additionally, mortgage payment holidays are in place until the summer of 2021 for homeowners and landlords who are struggling with payments as a result of coronavirus. This scheme has been a lifeline for many.

This range of support from the government has helped individuals and businesses who have been impacted by COVID-19. Additionally, these measures have had a positive impact on the UK housing market and provided added confidence to buyers.

Long-term property investment

In 2020, UK property remained a popular investment choice. Property as a long-term investment is seen as a more stable option than stocks and shares and other more volatile assets. During year, there was even an increase in demand from first-time buy-to-let investors and landlords.

Overall, the COVID-19 pandemic has changed the landscape of many sectors, but the UK housing market has continued to show its resilience. This year of adversity has further illustrated the market is strong and adaptable.

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