Key drivers influencing 2021 market health

Strategies and insights to help you win in the front room

2020 has been a rollercoaster year for the market. And while things will continue to be up and down in 2021, there’s one thing we can’t get away from: the pandemic has unlocked a lot of new demand for homes.

Our team of industry-leading experts have unpicked the six key drivers influencing UK property market health, so you have the tools and support you need to win in the front room.

The pandemic has led to a once-in-a-lifetime reevaluation of the home. But it won’t stop there. With big life changes still inevitable in 2021, the factors behind buyers’ decision-making will get more and more complex.

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Put these insights into action. Speak with a member of our team to help with your 2021 business planning.

6 key influencers of demand

1) Vaccine rollout

Progress on COVID-19 vaccines will have a big impact on how quickly key sectors of the economy can open back up. We expect enough progress to have been made by the second half of 2021 for an easing of restrictions and a relative return to normality.

Until then, we’ve put together a guide with more detail on restriction levels and what it means for your customers on Zoopla Discover.


2) The economic outlook

There are some challenges ahead, as the country continues to battle the impacts of the pandemic on the economy and day-to-day life. The impact on the housing market is less than in previous downturns as sales volumes have already fallen in recent years and affordability levels among buyers and renters aren’t over-stretched.

Economic growth should rebound in 2021. This will be helped along by ongoing Government support. The short term extension of furlough and the mortgage payment deferral scheme provides important support for homeowners.

+27.8%

Forecast UK house price growth in 2021


3) The EU trade deal

Negotiations on a trade deal look set to go down to the wire. In the absence of a comprehensive free trade deal, we assume some form of agreement will be struck to keep the flow of goods running. This would, however, have a possible impact on economic growth and trade early in 2021.

Even so, we believe the negative impact is expected to be minimal to the housing market itself and your business should not see a huge negative impact on forecasts because of it. Want to stay up to date with housing market policy changes? Subscribe to the House Price Index Report.


4) High LTV Mortgages

Lenders have reduced the availability of home loans for those with small deposits which is impacting first time buyer (FTB) demand - a key buyer group who accounted for 36% of sales in 2019.

Half of FTBs use loans of 85% loan-to-value (LTV) or more, and reduced mortgage availability is squeezing this group as lenders face major operational challenges from high levels of demand from home-movers. A prolonged lack of higher-LTV finance would impact housing chains and mean further risks to the market outlook in 2021.

Housing as a store of wealth, an ageing population and faster growth in older, single person households will all act to shape how the market evolves in the years ahead.


5) Keeping a pulse on mortgage arrears

75% of housing sales are supported by a mortgage. Mortgage payment holidays have been taken up by 1.1 m but a lot came off this after furlough.

Lower borrowing costs suggest borrowers will go after forbearance rather than repossessions, so we don’t expect to see widespread mortgage defaults and forced sales. With that in mind, the impact on pricing will be relatively low.

It makes for an interesting backdrop as corporate investors continue to buy and develop homes for rent and some smaller landlords return to the market, encouraged by the stamp duty holiday.


6) ‘What a home is really worth’

The pandemic has unlocked enormous demand for homes. The ‘once in a lifetime’ reassessment of housing that started in 2020 has further to run when combined with ongoing changes to working patterns for a lot of the population.

We’ve also seen a rise in the number of searches using keywords which relate to extra space in a home. We grouped together search terms including ‘extra room’, ‘spare room’, ‘office’ and ’study’, and found searches using these keywords had risen 71% in Q3 compared to Q2.

Properties that are well-tagged could be at an advantage when buyers search for home-working options.

54%

New sales agreed in month of January that typically complete by March


Put these insights into action. Speak with a member of our team to help with your 2021 business planning by filling in the form below.

Put these insights into action