Property market lockdown, a lack of new housing stock, the stamp duty holiday and pent-up demand have all made for a volatile – and highly watchable – property market during the Covid-ridden 2020. However, between the end of the stamp duty holiday, other taxation changes and uncertainty over vaccines and new housing stock, it looks as though 2021 may not be short of things to talk about.
Though perhaps not as bullish as during the second half of 2020, national estate agent, Jackson-Stops, thinks that house prices will rise by around 2% in 2021 (versus Zoopla’s 1% prediction). This expectation, the company said, is based on the assumption that the stamp duty holiday will not be extended, and that a vaccine will restore some modicum of normality by the second half of the new year and beyond.
The company added that property market transactions will likely swell during the first quarter of 2021, with a surge in sales agreed from the year before, and buyers looking to finalise deals within the final knockings of the SDLT holiday. Jackson-Stops – having advocated for the stamp duty holiday – believes that extending the relief scheme would see property prices rise by an additional 3-4% through 2021: great for homeowners, bad news for buyers.
Speaking on new taxation proposals, Nick Leeming, Chairman of Jackson-Stops, said: “Any punitive policies introduced in the new year will only reverse the momentum the market has gained over the past couple of months. With the stamp duty holiday coming to an end, an additional 2% surcharge for non-UK buyers expected to be introduced in April and uncertainty around Capital Gains Tax, measures must be put in place to prevent transactions falling off a cliff edge.”
Naturally, though, the Treasury are looking to recoup some of the losses made in 2020, and targeting tax hikes towards non-work income and overseas property investors, are probably among the more sound – and politically savvy – ways of doing so.
National Property Outlook
Speaking on the national outlook, Jackson-Stops predicts that the prime and super prime markets will continue to break away from the core housing market, gathering momentum throughout 2021. Buyers and vendors alike at this end of the market will continue to move due to a change in lifestyle aspirations which have been spurred on by the COVID-19 pandemic; many of these clients will be entering the housing market for the first time in decades. Whilst the introduction of a viable vaccine will act as a shot to the arm for the housing market, restoring confidence at every level, the return of SDLT will slow transactions down at the lower end of the market although the top end will remain resilient.
Jackson-Stops expects vendors and agents who are looking to sell properties priced at £1.5 million or higher will need to price their homes competitively next year as buyers become less compromising on their property wish-list. The company added that branches from across the Group have seen a shift in buyer behaviour at this level, with many house hunters holding more exacting preferences than ever before.
Nick Leeming continues: “We expect to see continued momentum at the top end of the market next year. These buyers who haven’t had a pressing need to move or buy a second home have held off doing so until now. Whilst the pandemic has caused a shift in lifestyle aspirations for all house hunters, this end of the market will be undeterred when SDLT comes back in April.”
Private sales in the country homes market
Jackson-Stops said that its country branches are expecting to see prices increase marginally throughout 2021, with branches in the South East and East Anglia regions expecting house price growth at roughly 2.5%. There has been a marked uptick in buyers from London purchasing in these locations and branch directors expect this trend to continue into 2021, which will help hold prices up in these regions. Meanwhile, reports from Jackson-Stops’ Chipping Campden branch show that the holiday homes market is less sensitive to COVID disruption, with prices expected to remain firm here throughout the year due to high demand.
It added that ‘every branch’ from the North West through to the West Country agrees that home offices and strong broadband connectivity will continue to sit at the top of house hunters’ wishlists next year, with many referencing that clients will want these home working facilities to sit outside their main residence, whether this is in an outbuilding or garden office. Similarly, homes with annexes will rebound as buyers with elderly parents or extended family reassess their living situations in light of the pandemic.
Nick Ferrier, Director of Jackson-Stops’ Midhurst branch, comments: “We haven’t seen this renewed level of demand from London based buyers for years – today, a great many more sales have been agreed with buyers looking to move out of the Capital to enjoy the benefits of living within the stunning English countryside. This surge in demand is expected to continue into next year. Even when offices begin to re-open many of our clients plan to work remotely at least once a week.
Private lettings market
On private lettings, the company said that its agents predict ‘steady’ rental price rises throughout 2021. This, the Group said, would be led by buyers looking for the ‘best of both worlds’ – either buying in the country or an urban area and then renting in the other area. The Group added that as the economy opens back up, short lettings will benefit, as staff are called back into work ‘hubs’ to work on kickstart projects.
“Overall, rental communities with enhanced amenities are set to do well next year, this is not exclusive to just those with communal homeworking facilities but also those which encourage a healthy work / life balance. Finally, all eyes will of course be on the Chancellor’s expected Capital Gains Tax reform next year and how this fits in with wider tax changes recommended alongside it.” Mr Leeming continued.
Speaking on new homes, the company said it expects prices of new builds across the country to level off in 2021, with delays in construction timelines created by COVID-19 creating an imbalance in supply and demand. Detached three-and four-bedroom new homes are expected to be the most popular next year, with buyers purchasing with a view to furnish one bedroom as a home office. High quality developments in more rural and coastal zones will be in high demand as house hunters continue to prioritise greater access to open space and greenery.
James Gibbs, Director of Jackson-Stops’ Exeter New Homes division, comments: “The demand we are currently seeing, coupled with a lack of supply of quality new homes, will counteract any negative impact from the end of the SDLT holiday in April. There is a clear desire from house hunters to create home offices and for strong broadband connectivity to be built into their homes moving forward. Housebuilders are of course perfectly placed to cater to these needs, whether this is through providing ultrafast fibre optic broadband or dressing their show homes strategically with home offices.”