Housing market 2020 – a year in review

For many businesses, its standard practice to sit back and take stock of the year gone by and this couldn’t be more prevalent for the year 2020. A year like no other yet despite the odds the housing market flourished beyond expectations. Therefore, what learnings can be taken from property moves in 2020?

The mini-housing boom

While the first quarter of 2020 showed promising growth the market came to a stall when the first lockdown was imposed. Post lockdown and restrictions being eased the second half of 2020 couldn’t have been more different.

Two key mortgage lenders, Halifax and Nationwide reported that overall demand and price growth for 2020 were relatively high.

Halifax stated that house prices in December were 6.0% higher than in the same month a year earlier. While Nationwide reported annual house price growth rose to a six-year high of 7.3% at the end of 2020.

The Bank of England further confirmed an increase in activity after its November stats showed mortgage approvals for house purchases soared to a new 13-year high in November. A total of 105,000 mortgages were agreed for people purchasing a property, the highest level since August 2007.

Once the Stamp Duty holiday ends it’s expected that house prices and demand will decrease, therefore to stimulate activity lenders are likely to re-introduce higher LTV products to enable first time buyers to get onto the ladder.

Property Hotspots in 2020

One of the biggest trends to emerge from the global pandemic was the urge for city dwellers to relocate to countryside and coastal retreats. With working from home and remote working now feasible options the city escape has become a huge reality.

According to Rightmove, the quaint Somerset town of Bruton saw the biggest increase in buyers searching for places to move to in 2020. Annual buyer searches increased by 72% last year. What’s more, it is just outside where Sarah Beeny is building a home in Channel 4’s Sarah Beeny’s New Life in the Country.

The second most popular place to live in 2020 was Pitlochry in Scotland, where buyer searches increased by 50% compared to 2019.

The top five places with the biggest annual increases in buyer searches are completed by Aylesford in Kent, Salcombe in Devon and Lightwater in Surrey.

The rest of the top 10 is also dominated by rural and coastal areas, which mirrors a wider national trend of home-movers looking to relocate to more remote destinations in 2020.

While the COVID pandemic continues into 2021 it is expected that buyers’ demand for rural retreats will continue this year as people have re-evaluated their lifestyles and priorities.

First Time Buyers

Post lockdown 1.0 it was first-time buyers (FTBs) that were hardest hit by the pandemic. 5% deposit mortgages were quickly removed by lenders overnight. Understandably lenders have been cautious during these uncertain times, yet, FTBs that previously accounted for over half of house purchases in 2019 were unable to take advantage of benefits such as the Stamp Duty holiday.

Data released by reallymoving showed between July and December 2020, the proportion of first-time buyers in the market fell by 12% compared to the same period in 2019.

Over 2020, FTBs made up 51% of all buyers in the market, compared to 56% in 2019.

While 16% of FTBs opted for a new build home over an older property, almost half of those (46%) used a Help to Buy equity loan enabling them to buy with a deposit of just 5%. Suggesting, while it has been more challenging for FTBs to get onto the property ladder they have been taking advantage of other schemes to enable them to do just that.

There is further hope for FTBs in 2021. Once the Stamp Duty holiday ends, over-inflated house prices should return to normal levels, lenders are also beginning to re-introduce higher LTV products and ultimately there will be less competition from other buyers looking to snap up properties.

Predictions for 2021

After a buoyant beginning to 2021, many economists and housing experts expect the market to weaken From April onwards once the Stamp Duty holiday comes to an end. Yet, with the UK’s vaccination rollout well underway and several other vaccines in the pipeline, it is hoped that this silver bullet will enable fewer restrictions to everyday life and, therefore, enable people to move more freely at the back end of 2021. In turn, this could see the housing market gaining momentum later in the year.

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