So that was 2021. Didn’t it whizz by? It only seems like five minutes since we were reflecting on an extraordinary 2020 – the year that unlocked record growth despite a background of perpetual lockdowns.
The big question a year ago was whether this momentum would carry forward into 2021, too? The experts couldn’t agree. Rightmove said yes, whereas Halifax and the Office For Budgetary Responsibility said no. The latter predicted a fall in house prices of 4-8%. Yikes.
Fortunately, however, this year defied the doomsters again. After a very slight dip in house prices during January, we’ve seen pretty much continuous growth. The result? An annual price rise of 7.1% nationally. This prodigious growth even continued when the stamp duty holiday wound down. In fact, Halifax reported a 3.4% growth in the three months to the end of November – the highest quarterly rate since 2006. Put that in your pipe and smoke it, pessimists.
However, 2021 wasn’t just significant because of its bumper sales; it also embedded two important long-terms trends in the property sector: the adaptation of game-changing new technologies and a move towards more sustainable homes. So, without further ado, let’s reflect on the year that was…
The big events
The most influential moment of the year was probably the budget in March. Dishy Rishi, as some like to call the chancellor, announced a whole host of measures including an extension to the stamp duty holiday until the end of June (with a phased transition thereafter). This averted a cliff-edge and gave the sector confidence.
However, the budget wasn’t just about stamp duty. There were other eye-catching measures to help buyers and tenants. The Mortgage Guarantee Scheme, for example, covered lenders’ losses on 95% loan to value mortgages of up to £600,000. This gave financial institutions the confidence to offer more generous packages – great news for both first time buyers and those looking to upsize.
Although critics worried that the scheme was similar to the Help To Buy initiative that lasted from 2013-2017, Rish the Dish’s policy was open to everyone rather than merely those taking their first step on the property ladder. It therefore gave the market an extra shot in the arm. A nice little booster, if you like.
There was also welcome news for ailing tenants in spring. May’s Debt Respite Scheme prevented landlords and banks from chasing unpaid debts for a period of up to 60 days. A week later, the Queen’s Speech banned ‘no fault’ evictions.
The other significant announcements from the Queens Speech were the new Planning Bill, which simplified and accelerated our slow-as-molasses planning procedures to help the government build 300,000 new homes per year. The chancellor also abolished ground rents – something that delighted Propertymark. Elizabeth’s enunciation also promised to introduce lifetime deposits, which will make life easier for tenants, too.
However, although these moves pleased troubled tenants, it was a different story for struggling landlords, who had already suffered 2020’s eviction ban and a 3% surcharge on buy-to-let homes. At least the Boris brigade strengthened landlords’ right to either sell or move into their rental properties, though.
After the stamp duty stampede
Many property experts attributed 2021’s extraordinary growth to the stamp duty holiday. After all, there was a 26% fall in purchases in the third quarter of the year when normal service was resumed. However, we argued that stamp duty holiday wasn’t as influential as billed. Q3 purchases still remained 10% higher than they were in 2019. What’s more, as we explained above, growth in the three months up to November was very pleasing. Therefore, the year has finished on a high.
Overall, we believe that the pandemic (which created a surge in demand for properties with larger gardens and room for home working), the availability of cheap mortgages, plus the fact that demand has constantly outstripped supply played a bigger role in 2021’s growth. A report by LSE backed this up. The stamp duty holiday was important, of course, but growth was strong before it came into effect.
What Rishi Sunak did was put a rocket under what was already an ascending market.
Price growth was so high that, for a time in summer, UK homes were actually cheaper to rent than buy. New research by Hamptons calculated that the typical mortgage cost £1,125 per month whereas the average rent was £1,054.
Although this situation isn’t going to last, the lettings market also performed strongly in 2021 with average growth of 3%. Tenant demand returned a net balance of +48% in November according to RICS, with growth intriguingly reappearing in city centres once people returned to the office in autumn.
Time to get techy
As mentioned earlier, 2021 wasn’t just significant for its growth; new technologies and sustainability became increasingly important, too. So let’s turn to these long-term trends now.
The April launch of Boomin showed that online property innovations continue apace. Boomin’s Secret Properties, Sneak Peaks, Property Playground, and Matchmaker features all moved the needle to some extent – although there was also some needle between the new portal and anxious agents, some of whom worried that the Matchmaker facility might steal their business.
Overall, however, digital tools in general continue to help agents and revolutionise the sector. They streamline processes, save time, and reduce costs. The advent of the Digital Home Move Revolution, which allows movers to book viewings, verify their identity, sign documents online, and track milestones in real time is the perfect example. Agents benefit because the technology keeps them up to speed, reduces their admin, and ultimately completes transactions faster.
Having said that, we’re big believers in the principle that technology should supplement rather than replace traditional methods. That’s why we’re watching the hybrid agency model with interest…
Hybrid agencies take the best bits from both the traditional high street and online agency models; so things like registration, viewings, appointments, and updates can all be done online, with agents ready to step-in and offer expertise with a personal touch when required. That’s very much our MO at Just Move In.
It will be fascinating to see where tech takes us in 2022 and beyond. So much progress has already been made. Online conveyancing, open banking, and increased use of cloud-based collaboration tools are probably the areas to watch closely next year. We might also see an increase in the use of video marketing on platforms like YouTube and TikTok.
Protecting the planet
COP26 was on everybody’s radar in November. And we gave our reaction here. Although it wasn’t a runaway success – China and India insisted that coal should be ‘phased down’ rather than ‘phased out’ – there were still many successes. Leaders from more than 100 countries pledged to end deforestation by the end of the decade. What’s more, similar pledges were made to cut methane emissions.
The summit also showed that public pressure on politicians to promote sustainable policies is becoming hard to ignore. Big business and banking are also getting on-board. In fact, one of the best bits of news from COP26 was that major financial organisations have agreed to back "clean" technologies like renewable energy.
We’re finally beginning to see evidence of this increased political will in the UK. And it’s slowly seeping into the property sector, too. Our sustainability report, Getting Our House In Order, showed that whilst agents still have some way to go in terms of embracing sustainability, there’s certainly an appetite to learn and improve.
There have also been promising signs in parliament. Back in 2018, the government legislated that all privately rented properties must have a minimum EPC rating of E. This threshold was raised from E to C this year. Meanwhile, although there have been some setbacks like the demise of the Green Homes Grant, Boris’s battalion is finally turning up the heat on gas boilers: they’re introducing a new Boiler Upgrade Scheme and giving grants of up to £5,000 to install air source heat pumps.
Reading the tea leaves
So what does 2022 have in-store? Here’s what we saw in our Just Move In branded crystal ball…
For starters, we’ll probably see an increasing number of micro flats, those one-room homes with 37 square metres or less of floor space. Space in city centres isn’t going to increase anytime soon. We also predict that the effects of Brexit on the property sector will remain just as difficult to extrapolate from broader economic pressures. And as for the comeback of city centre flats, that depends entirely on what happens with Omicron and any other mischievous Covid-19 variants.
But what about the really big picture stuff? Will the housing market continue to buck national trends, and make agents as pleased as Punch after a cathartic row with Judy, or will the doomsters finally have their day? Personally we think the former is most likely. After all, a small island like ours with a large and expanding population, tough planning laws, low-cost mortgages, plus a lack of stock, is set up for price rises.
There are some caveats, though. The Bank of England has already raised interest rates. Unemployment might also rise if the pandemic endures. These factors might change the outlook somewhat. Encouragingly, however, Rightmove (who’ve been pretty accurate of late) believe that prices will rise by a healthy 5% nationally next year, with a not insignificant rise of 3% in London.
Whilst the market is likely to return to something resembling normality in 2022 – we won’t see the same frenetic activity as 2021 – strong buyer demand is still likely to support the sector. Although more homes might finally come to market, resulting in a better balance between buyers and sellers, the good times should still rumble on.
Let’s reconvene in twelve months and see if we were right.