PROPERTY
What will 2021 hold for the property market?
If 2020 has taught us anything, it’s don’t make predictions. Yet despite the only certainty we have for 2021 being more uncertainty, Narinder Singh Nijjar (pictured), co-owner of Leicestershire-based estate agent The Lettings & Sales Business, shares his thoughts on where he sees the property market heading this year.
The property market nearly ground to a halt in the first quarter of 2020 with the effects of the first lockdown and the pandemic having a noticeable impact on the market. From Q2 onwards, pent- up demand from buyers and the stamp duty holiday beginning in June 2020 spurred such a market recovery that it took many seasoned observers by surprise. Some agents reported an
increase of 25% of sales instructions coming to market. By September last year, the housing market was at its greatest growth since 2016 and showing no sign of slowing down. This was fantastic for home sellers, buyers and property professionals.
IMPACT OF STAMP DUTY AND FURLOUGH ENDING As we enter 2021, my opinion is we’ll now see a levelling out of the market, with slight decreases in property prices. Once the stamp duty land tax initiative (SDLT) comes to an end — either this month or slightly later if it's extended — and then closely followed by the end of the furlough scheme in April, I feel we’ll see a slowdown in sales completions as the incentive of no stamp duty to pay will impact the appetite to sell or buy. I say levelling out because we
have witnessed an artificially high value market driven by factors such
as SDLT and now this will come down to more realistic levels. But I do feel that, surprisingly, there will still be an upwards trajectory of prices and I can see a 1% average increase in property prices in the first two quarters.
MOVING TRENDS The pandemic has changed the type of property sought by house- hunters. More commuters are relocating out of larger cities such as London and to more family- friendly areas such as Brighton, Southampton and Leicester. More thought is being given to larger outdoor spaces and home office set-ups. This may well ensure prices stay robust for a while longer in areas of this ilk. Obviously, this may go hand in hand with a decline in London prices.
Another challenge on the horizon for the property market is
Autochair Limited takes over new factory
The strength of the freehold market throughout the pandemic has been highlighted after a company specialising in adapting vehicles for people with disabilities took over a large Alfreton factory. Autochair Limited, which sells its accessibility products across the world,
expanded into a 60,000 sq ft premises in Salcombe Road, within the Meadow Lane Industrial Estate, just before Christmas. FHP Property Consultants, the commercial property agent that oversaw
the deal, said this was one of the few buildings of this size available in the region over the past year. Director Tim Gilbertson said: “It’s always dangerous to try and predict
ahead in such turbulent times, but from a pure supply and demand basis, it does seem as if we are set for another year of continued rent and capital value increases – coupled with an overall lack of supply and good demand throughout all sizes of the industrial and distribution market throughout the East Midlands.”
86 business network March 2021
Autochair Limited’s new factory in Alfreton
that while first-time buyers have been a driving force since 2010, following the introduction of Help to Buy and the availability of high loan-to-value (LTV) mortgages, the market looks set to change. Lenders are withdrawing some
products that would have been geared towards the first-time buyer and this in turn means lenders are viewing smaller deposits as riskier for lending. Many first-time buyers are now discovering they need to have much larger deposits – in some cases almost 40% – which is contracting the market overall. While property prices are clearly
an important consideration, the rental market moves independently, bringing with it separate predictions. The rental market tends to be
stronger and more resilient than the sales market and this is even more apparent if there was to be a downturn in house prices. The last major financial crisis in 2009
resulted in house prices falling by 18% but rentals only fell by 2%. This could well be the case as we
head in to 2021. Landlords who are in it for the long game will hopefully see it as business as usual, with the exception of investors linked to the student market. This will obviously be dictated by external factors such as universities and colleges being allowed to open again, and the appetite for students to live in shared accommodation.
GETTING TIMING RIGHT Investors always ask me when the best time to buy is and while there’s no tangible science to this, I always stress it’s best to buy in a downward moving market. My experience has taught me that
it’s always a good time to negotiate a deal when on a downward spiral as sellers will be more receptive to a deal, as they feel the market is still going down “and best to strike a deal while I can”. In summary, I believe the sales
market will come down, but thankfully not at the levels of 2009. For those of us who are ready to
make a move, there will be some fantastic deals to be had. If everyone is worried about the values of property and in theory “anti- property”, then that’s the time to invest and build your portfolio. I’ve not even begun to digest the impact of Brexit yet…
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