The housing market one year on from the first lockdown

by | Tuesday 23rd Mar 2021 | Mortgage Insights

Home buyers after lockdown

Exactly one year on from the start of the first lockdown of 2020, how has the housing market changed – and what does the future look like? Oportfolio’s founder, Oliver Whitehead, looks back on a year like no other.

It seems incredible to think that it’s been a full year since we battened down the hatches and began a very different lockdown life confined largely to our homes.

It’s been a year of sacrifice for all of us in one way or another. Those sacrifices have been more acute for some than they have been for others. Lives have been lost, health has been compromised, finances impacted.

None of us should forget the terrible toll this pandemic and the restrictions that were implemented to combat it have taken on some people over the past 12 months.

Yet, as is the case in every crisis, some areas of life have benefited from the measures we have lived with these last 365 days – and, on paper at least, the residential housing market is one of them.

The internet is awash with statistics and data relating to the market at various points over the year, but in a nutshell two conclusions seem to have been drawn from the past year:

First, the market has been stable over lockdown and second, that recent extensions to both the Stamp Duty holiday and furlough may well be enough to prevent the downward turn that was predicted before Chancellor Rishi Sunak unveiled his 2021 budget.

So, what does a snapshot of residential housing in 2020 look like?

Stamp Duty holiday

The launch of the Stamp Duty holiday in July 2020 was designed to kickstart the housing sector that had been all but closed as part of the stringent early lockdown measures, and it worked.

Between June and the end of the year, housing transactions outperformed the same months in 2019. Which? magazine reports that figures released in January this year showed a year-on-year increase in house sales of 24%.

There’s little doubt that the potential to wipe up to £15,000 off your Stamp Duty fee played its part in driving that activity.

But it’s also fair to assume that the scheme’s success also owed much to the fact that being cooped up at home for weeks on end, and the likely continuation of remote working after the pandemic ends prompted many people to reassess what they needed from their living space.

A seller’s market and rising prices

The sudden rise in demand for houses created a seller’s market, combined with the Stamp Duty holiday, created a ticking clock for people to get their purchases over the line by March 31 of this year (although, as we now know, that deadline has since been extended to September 30).

As the Which? report bears out, that in turn triggered a spike in house prices.

Whether that spike was artificial or not remains to be seen, although prior to the extension of the Stamp Duty holiday some estate agencies and lenders, including Savills and the Halifax were predicting that prices would fall during 2021 as the effects of both the pandemic and Brexit began to be felt.

Whatever the reality of the long-term effect on house prices, Land Registry figures show that on average prices were 8.5% higher in January than they had been a year earlier.

The (temporary) end of the 100% mortgage

Understandably, the pandemic, Job Retention Scheme (furlough), and the uncertainty caused by the virtual long-term closure of key sectors such as hospitality, arts and entertainment gave lenders reason to be particularly cautious during 2020.

One of the effects of that was the withdrawal of the 100% mortgages which had begun to make a reappearance.

These have since begun to re-emerge, with the Yorkshire Building Society being the most recent to announce a 100% mortgage product in the last few days.

Even so, first-time buyers have found the market a tough place since lockdown began.

Low interest rates, longer fixed-term rates, and longer repayment terms

Amid all the uncertainty, the Bank of England has kept the base rate at an all time low of 0.1%, making borrowing cheaper (though obviously that has been bad news for savers).

There has also been a rise in the number of long fixed-term rates available. These had already begun to become a fixture of the mortgage sector before the pandemic hit, though Santander’s recent decision to offer  40-year repayment periods may well change the landscape again.

And what about 2021? Well, as I’ve always said, only a fool would make hard and fast predictions about the UK housing market – no one, after all, could have predicted the year we’ve just had.

For me, in all the uncertainty and upheaval of first the decision to leave the EU and then the pandemic and then our official departure from Europe, there has always been one truth: if you have a secure income and are able to afford to move, now is the time to do it.

On average, according to the latest Land Registry figures, it’s taking an average of 67 days to complete a property transaction, and whilst this is down from the 60 days the Registry reported in the autumn, it is still plenty of time to get a purchase done and dusted by the time the Stamp Duty holiday ends in September.

All other things being equal, some reports suggest interest rates look to be relatively stable for the next two years, while mortgage lenders are also understandably keen to keep the market moving in a positive direction.

So, if you’re considering a move in 2021, get in touch and talk to one of our friendly expert team to see how we can help you to buy your dream home this year.

Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority

Your property may be repossessed if you do not keep up repayments on your mortgage.

Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.

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