Originally published in the Winter edition of Society Matters magazine (December 2020).
By David Plumtree, Chief Executive Connells Group Estate Agency
Pent up demand for housing during lockdown was unleashed when restrictions were lifted, buoyed by a stamp duty holiday and a desire for more space.
The UK housing market has experienced something of a mini boom since reopening from lockdown in May, with the market still able to operate throughout various regional restrictions. During the second lockdown in England, Connells Group has been able to service pent up demand from customers from across its network of nearly 600 nationwide estate agency branches.
The pandemic has not been a deterrent for buyers and renters determined to make a move. This unprecedented situation has shone a spotlight on people’s lives, prompting them to re-evaluate their aspirations, reassess their needs, how and where they want to spend their lives. It has given the impetus to put plans into action including making that house move, with real impetus created by the temporary stamp duty holiday.
House hunter demand
We’ve witnessed a noticeable ‘race for space’, with many house hunters looking for larger houses suitable for home working, or rural homes, and those bigger properties with outdoor space. Space – and having access to your own private space – has become so important.
Inevitably, there has been a pull out of London and other cities, with customers happier to commute from further afield on the assumption they will need to commute less frequently post-Covid. With an emphasis on remote and more flexible working, customers are willing to endure longer journeys when this isn’t five days a week.
The same applies to renters – again, we’re seeing slightly less demand in central London. There is a lack of need to be right in the city centres, but certainly heightened demand to be within close proximity to tubes and stations for ease of travel into towns and cities for work when need be.
In terms of actual layout and design of homes, there has been a definite focus for customers on those homes that provide compatibility for homeworking – be it requests for information on properties that feature a study, or a garden office area that allows for a separation between ‘home’ and ‘work’, or the availability of superfast broadband. Digital connectivity is not a ‘nice to have’ but an essential service, and homes that do not have good, reliable connectivity are likely to be harder to sell.
These demands are expected to shape new housing and filter down into housebuilder’s planning. Where once the kitchen table or spare bedroom may have worked as a temporary solution, as home working or ‘agile working’ increasingly becomes the norm developers are likely to respond and incorporate dedicated home working spaces in new build homes with, of course, the required digital connectivity and ‘smart’ features thrown in.
In terms of house prices, Connells Group is currently seeing c. 6% year on year growth and we expect this to move toward 8% over the next couple of months, based upon prices currently being achieved at the ‘sale agreed’ stage. There is strong demand from buyers and an increase in supply of new instructions to the market and increasing confidence in the housing market.
Without a crystal ball, it’s difficult to predict 2021, and the big unknown is whether we will experience a down-turn as unemployment levels spiral and if we enter a recession. However, we do expect H1 to show good growth created by the mammoth pipeline converting in Q1 and those prices pulling through to the various indices.
We believe demand will tail off from around February onwards, unless there’s an extension to the Stamp Duty holiday, and asking prices will inevitably soften from Q2 onwards and, therefore, likely to create a downwards effect on H2.
My best guess for house prices for 2021 would be a range of -2% to +2% dependent upon extent of damage to economy, level of unemployment, on-going Covid issues, Brexit deal/no-deal and resultant impact on housing market.