Well, what a year 2020 was…
No one could have predicted what was going to happen globally both from the point of view of the pandemic and the economic fall out in the initial few months followed in the stock market, the housing market that was put on hold, the predictions, and of course the recovery followed by more lockdowns.
So back to the start. The property market was set for a solid year, nothing spectacular just solid. We predicted a rise of circa 3-4% for both Manchester and Liverpool, London to be between flat and -0.5% and the country as a whole to rise around 2%..
This was thrown into turmoil when towards the end of February we started to really find out about COVID and a number of newspapers started to speculate that a lockdown was imminent. This of course happened and the stock market plunged from circa 7,500 points to under 5000 points wiping trillions from the market and on one day in particular in the UK investors lost £125bn.
Over the coming months, predictions were made about all investments, and of course, the property market was not immune to this. We saw predictions of anything between a 5% and 30% drop. The 30% was predicted by the Bank of England which in hindsight was a shocking prediction.
We don’t like to brag, but of course, we are going to, we said nothing of the sort would happen. We hosted a webinar in April/May (which is still available online) and stated that the main fundamentals (Taxation/Legislation/Interest rates) have not changed so therefore the property market would just be on hold and recover nicely once the lockdown was lifted.
What came next we didn’t predict.
The market boomed. We saw a huge amount of pent up demand and on top of that, the Chancellor decided to put on a Stamp Duty holiday which was simply adding fuel to the fire. Due to this we have seen the biggest increase in growth since 2016 with some cities hitting 6% year-on-year returns.
As you can see from the table below most of the cities we recommend are in the top 10 of returns last year.
However, there are negatives. The biggest negative is the time it has taken solicitors to get up to speed on working from home. Solicitors were slow at the best of times but at the moment we are finding transactions have taken on average 5 months which is far too long. We are working on ways to speed things up with our recommended lawyers but this will only sort part of the issue out not the inquiries stage of the process.
So of course more lockdowns followed and we find ourselves where we are today. So what next.
It will always be predicted that the investment market will fall whether that is the property or the stock market, you will always find the negative reports outweigh the positive this has been proven. But when we look behind the reports we have to look at the facts.
So we know that at some point in time the Stamp Duty holiday will come to an end. This is where papers are predicting a cliff edge. However, we are stating that on average people are only saving around £1,750 based on the average house price. So we don’t feel that this will make or break the market.
Also, we have to look at what people have financially. The reality is on average people are financially better off now than they were 12 months ago. This is due to mortgage holidays, furlough, the ability to take second jobs with furlough, bounce back loans etc.
The Bank of England stated that there is an extra amount of money across everyone’s account in the UK and that total is just over £100bn extra in savings.
Also, just after the 1st lockdown was lifted we saw that the economy was recovering nicely. This was shown in a Telegraph report.
The subsequent tiers and lockdowns halted this but there is no reason we won’t see a similar thing come the summer of this year.
However, despite the positives, we are not going to see the same bumper returns we saw last year. We are looking to be more conservative and believe that the property market will be more around the value we put on last year. So circa 4% for the top cities such as Manchester/Liverpool/Leeds etc.
One thing that has changed is we are seeing pockets of opportunities in London especially around Zone 4 which is around 20 min from central, we have seen developers get carried away purchasing land and now need rid of their units.
So, all in all, there are opportunities out there we just have to find them for you and strongly believe that the market will continue to be solid despite what the economy throws at it.
If you have any questions please fill in your details below and we will be more than happy to help.
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