With a global pandemic and the UK going in and out of recession, 2020 has been an unprecedented year.
But the housing market has been one of the bright spots, with the number of sales agreed now running 38% higher than a year ago.
As the new year approaches, our Research and Insight team reveals its predictions for the year ahead.
Buyers rushing to beat the stamp duty holiday deadline are set to boost the sales pipeline in the first quarter of 2021.
Some 100,000 more sales than normal are expected to complete before the end of March, with the increased sales pipeline from the final months of this year spilling over into next year.
But this uplift is set to be short-lived, with sales completions slowing down once the Chancellor’s tax break ends.
With wider economic uncertainty impacting market sentiment, and a slice of sales likely to have been brought forward into 2020 and early 2021, transaction levels in the second quarter are set to be 20-30% below normal. They are then tipped to run 10% below 2019 for the second half of the year.
At 1.1 million, the number of completed sales in 2021 are projected to be in line with 2020. However, without the forecasted surge in sales in the first quarter, this figure would have been a predicted 1 million – down 9% on 2020.
A lot hinges on the economic outlook and roll-out of COVID-19 vaccines. With a fair wind, there’s scope for a stronger rebound in sales volumes in 2022, which could take them back towards 2019 levels.
House price growth is forecast to hit 4% by the end of this year, slowing to 1% by the end of 2021 as a result of weaker sentiment and economic uncertainty.
It is projected to range from 0.5% in the east of England and the north east, through to 1.75% in Scotland.
Our August House Price Index Report revealed a gap in demand opening up between first-time buyers – a driving force of sales over the last decade – and homeowners.
First-time buyer demand spiked after the first national lockdown but lost momentum. Meanwhile homeowner demand was slower to respond but was 37% higher than pre-COVID-19 levels and 53% above the same point last year.
Our latest House Price Index Report reinforces that trend, with tightening mortgage availability and growing economic uncertainty continuing to hit buyers with small deposits, and more sales in areas with wealthier households and at higher prices. This polarisation is likely to become more apparent by mid-2021.
This shift mirrors the trends seen immediately after the global financial crisis, with more activity among homeowners with larger properties.
For the wider impact of coronavirus on the property market, check out the latest from our Research and Insights team