Everyone hopes that 2021 will be a better year, but to be honest, no one can predict what it will bring with Brexit and the COVID-19 pandemic still going strong.
But even in the given context, the UK real estate market expects a promising start in the following months.
Yes, Brexit and the coronavirus pandemic will continue to shake the industry, but the market has shown resilience during the last months, and it’s expected to maintain it in the new year. The action plans meant to stop the spread of the virus and the promising news of an effective vaccine will positively impact the housing market. The industry registered a property boom during the last months, and experts expect it to continue into 2021. As 2020 drew to a close, (surprisingly) the market has shown continued growth with interest from sellers, renters, and buyers located in both cities and the countryside. Experts think that with the imposed lockdown restrictions that stopped people from leaving their houses, they have understood the importance of having a comfortable property that provides them with entertainment and relaxation means.
So, what should we expect in the following months?
Real estate prices will be more subdued
Even if real estate transactions have reached record levels (for a pandemic period) during the last months, sales activity will probably slow down during the first quarter of 2021. Price growth will also be more subdued in the next year. Rightmove stated that the national average property price would register a 4% growth in 2021. This will also trigger an increase in the real estate property price, that will most likely grow with 1%.
Most real estate experts think the market will register a rise in prices in the coming years. most forecasts predict that the market will pick up in 2022 and move faster over the next five years.
How will coronavirus and Brexit impact the market?
Even if it’s a significant event that will impact all life aspects, Brexit will probably not affect the real estate market in the short term. In 2021, the UK’s housing market won’t feel the event’s effects, as much as real estate agents expected. But it can trigger a lull in house transactions in the second quarter of 2021.
Now that we established that Brexit wouldn’t have a high impact on the UK house market, we can go to the next factor that is expected to affect it. Coronavirus is the hottest subject of the moment, and it has been for some months. But now, that the news announces an effective vaccine available, the real estate agents expect people to feel more confident of getting out of the house and returning to their normal lives. However, this won’t happen in the first months of the year, but most likely starting with the autumn months. As more vaccine doses will become available in the second part of the year, the real estate market and the broader economy will register a boost.
Research shows that a coronavirus vaccine’s arrival will boost consumer confidence and enable the national economy to recover because there’s no longer the risk of a possible lockdown. Interest rates will probably remain at the same values, and banks still willing to lend, to motivate buyers to invest in the housing market.
The UK real estate industry still has many buyers with the financial strength to invest, and Brexit or COVID-19 won’t impact it. The buyers who are willing to invest in the real estate market in the following months will see what is most popular in the industry and put their money on the bet with the highest chances to overperform.
Real estate demand and buyers’ priorities change
Over the last months, there has been a high demand for moving house, triggering a record number of real estate transactions. Coronavirus lockdowns have led people to reassess their house priorities. After spending most of 2020 at home with their families, people are looking for more space and reliable internet connectivity. This, along with spending the winter holidays locked inside their homes and without feeling the usual festive joy will fuel a high demand in larger houses in 2021.
As more businesses recognise that remote work is a new reality, real estate agents need to find properties that match the latest market requirements. People need houses that provide them with access to outdoor areas, and adequate space to work from home.
There is a similar rental sector trend with landlords upgrading properties to include home office spaces and high-speed internet connections.
The 15-minute away from city house trend
Even if scientists have found a vaccine for coronavirus, people will likely continue to work from home in the future. The shift in lifestyle has led to the development of a new trend. People want to live in suburban areas where they can spend time outdoors and have a unique living experience. They still want to have access to all the benefits the city offers, but they no longer find it crucial to living at its heart. The rising trend with the 15-minute away from city house is expected to grow in 2021, helping small cities to grow. The 15-minute is a concept popular worldwide because it puts forward decentralised cities, where there are few cars, and people can reach the points of interest in less than 15 minutes, by public transport, bike or on foot.
In 2021, this concept will create a vibrant vicinity and build new communities. In the beginning, the trend emerged from the need to reduce urban carbon emissions, but as the coronavirus forced a global lockdown, it served the new growing needs for people to escape the busy and crowded city. Now they are looking for discrete neighbourhoods, where they can work and enjoy life.
Despite that the new year brings a lot of uncertainty, the UK house market will probably remain resilient in the following months.
Additional resources and related reading:
- Don’t let poor credit rating limit you – find a bad credit mortgage advisor.
- Reverse mortgages can cost less than conventional loans.
- Should you buy or rent in the UK.
