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.
Put these insights into action. Speak with a member of our team to help with your 2021 business planning.
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.
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.
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In the last eight years, the growth of first time buyers has outpaced all other buying groups and in 2018 they became the largest buyer group in the UK.