What a year it’s been. There aren’t enough adjectives to describe what we’ve all been through. On the one hand it was deeply troubling and traumatic; on the other it was heartening to see how the property market bounced back in the face of unprecedented pressures. Covid-19 asked a series of tough questions. But as an industry we somehow managed to find the right answers.
Experts feared the worst back in March when lockdown threatened to shutdown the entire sector. However, despite being a people-orientated industry, the market not only found a way to survive; it actually thrived. And this happened against all the odds. It’s quite the achievement.
Nobody should forget the human and economic carnage caused by Covid-19, of course. Lives have been lost and businesses have suffered greatly. But considering where we were in lockdown, when the total number of moves fell by 12% week-on-week for seven consecutive weeks, it’s remarkable how the sector rallied.
Autumn saw record demand, prices on the rise, and October was the busiest single month for transactions since March 2016. And activity remained high all the way through to December. The despair and foreboding had therefore turned into more than just coping. So, without further ado, let’s look back at how everything transpired…
Lockdown unleashes an unexpected boom
When the first lockdown arrived, many analysts struggled to see how the property market could function. How would viewings take place? How would people physically move whilst physically distancing? At first, these fears seemed justified. Demand plummeted as Covid cases soared. However, after 13 May the number of people moving home each week began to increase week-on-week by an average of 29%. Thankfully it was a sign of things to come.
Although lockdown suppressed the traditional spring surge, the pent up demand was released during the summer. Rightmove estimated that 175,000 moves were frustrated during March and April; therefore when the better weather arrived, the market started moving again with a vengeance.
The surge in demand was also inspired by buyers’ desire for larger properties with generous outside space. Penthouses in prime city centre post-codes were no longer prized properties post-lockdown. Priorities were being reassessed. This entrenched the drift away from city centres as buyers sought homes where the grass was literally greener.
A summer to love
July and August are usually somewhat sleepy for agents. However, in 2020 their offices remained hectic hives of activity during what became one of the longest and hottest property summers in recent memory. An enormous £37 billion worth of property sales were agreed in July alone. This was the busiest month for home buying since they started collecting data.
Pent up demand wasn’t the only factor in this summer boom. On 8th July, Chancellor Rishi Sunak announced the most significant property moment of the year: the stamp duty holiday until March 2021. This meant that most people could save what it cost to move. And in South East suburbs like St Albans and Kingston, where property prices were higher, buyers could move for free plus pocket five-figure sums. This resulted in unprecedented demand: the number of registered buyers was 38% higher than the equivalent period in 2019.
An active autumn turns into a frenetic festive period
The final quarter of the year involved a feverish rush to seal deals before Sunak’s stamp duty sabbatical expired. There was some concern that the end of furlough might throw a metaphorical spanner into the works, but once this was extended until April 2021 it was full steam ahead. This year’s pre-Christmas period was consequently the busiest for more than a decade.
2020, therefore, finished on an extremely high note. Demand was an astonishing 34% higher than the equivalent time last year. Meanwhile, prices continued to rise month after month despite many sellers reducing their properties in the hope of a quick sale and a swift onward purchase. Agents were therefore busier than Santa in the run-up to Chrimbo.
Spare a thought for the landlords
Sadly, however, 2020 wasn’t a good year for everyone. Whilst the government’s eviction ban (not to mention furlough) offered relief to tenants, private landlords found themselves under pressure as their income was squeezed. Groups representing landlords criticised the blanket ban and claimed their ability to deal with arrears was severely compromised. They also worried that the requirement to give six months’ notice hampered their efforts to deal with anti-social and disruptive tenants.
The increasing prevalence of Build To Let schemes didn’t go unnoticed either. Although the mortgage holiday helped landlords to some extent, as did the stamp duty holiday for those looking to expand their portfolios, many private landlords might be feeling nervous as 2021 begins. After all, the 3% surcharge on buy-to-let properties plus the phased reduction of mortgage interest tax relief had already made their lives harder before the pandemic arrived.
Life for commercial landlords looks even more uncertain. With more people working from home, and many businesses now questioning the need for large permanent offices in central locations, 2020 could lead to considerable upheaval. Perhaps the fall in demand will eventually see more offices turned into residential apartments?
The technology turnaround
Whilst the chancellor deserves a pat on the back for his furlough and stamp duty initiatives this year, the surprising success of 2020 wasn’t all down to Downing Street. Agents recognised that lockdown was a challenge and adapted admirably to the new reality by embracing new technologies on an unprecedented scale: virtual viewings, online valuations, digital signatures, and live-streamed auctions all helped to keep the sector afloat.
The popularity of virtual viewings was particularly noteworthy. These virtual walkthroughs- once considered a luxury marketing extra - showcased homes 24/7 and reduced the number of wasted physical viewings. Consequently, they’re almost certainly here to stay. Agents’ tendency to lean on traditional rather than technological solutions looks to be fading in other areas too. The future of tenant referencing, for example, is likely to be digital.
The growth of innovative property websites such as Boomin, OpenBrix, Homesearch, and SearchSmartly also demonstrates how technology is rapidly changing the industry. These intuitive portals, which represent a new challenge to Rightmove and Zoopla, offer new ways of representing relevant property data and aim to establish more customer-focused and user-friendly experiences. OneDome also enables buyers to manage an entire property transaction from one location by connecting them with reputable conveyancing and mortgage providers. Ingenious.
There’s no doubt that 2020 has been a year of tremendous change. The market reinvented itself in many areas and some of these changes look set to endure. Digital tools have streamlined processes, diluted out-of-date attitudes to technology, and promised to revolutionise property marketing whilst reducing costs. There’s just one problem. Despite all these promising developments, the doomsters are still out in force predicting a troublesome 2020.
Within the last few weeks both Halifax and the Office for Budgetary Responsibility have predicted a fall in house prices of 4-8% next year. They warn that the end of Sunak’s stamp duty siesta, plus a rise in unemployment sparked by Covid will end the record demand witnessed in the second half of 2020. It’s easy to understand this argument. However, it’s worth pointing out that not every expert agrees with this pessimistic prognosis.
With coronavirus vaccines already being issued, a Brexit deal in place, and the nation’s economic prospects uncertain but eager for normality, the future isn’t necessarily bleak. What’s more, if 2020 has proved anything it’s that the property market is remarkably resilient. That’s one reason why Rightmove has predicted that property prices will rise by 4% next year. If this materialises, then we’ll all be entitled to do a celebratory jig whilst jeering the recurring prophets of apocalypse.