Provided that the stamp-duty-holiday is not extended and some degree of normality follows the rollout of a UK wide vaccine next year, average UK house prices should expect a marginal uplift of around 2% in 2021.
The predictions from national estate agent, Jackson-Stops, go on to forecast a swell in hosing transactions in the first quarter of next year, due to a combination of a surge in sales agreed from the year before and a rush of buyers looking to get deals done by a whisker ahead of the SDLT holiday deadline on 31st March 2021.
The group predicts house price growth will increase by between 3-4% across 2021 should the SDLT relief be extended beyond March.
Nick Leeming, Chairman of Jackson-Stops, comments: “The Stamp Duty Land Tax holiday, along with a renewed desire to move due to lifestyle changes post-lockdown, has seen thousands of buyers and sellers rush to the market, keen to beat the March 2021 deadline. Our sales figures between July and October show a 148% increase across our country markets. But we know this surge in transactions can only last so long. This tax holiday has been critical in keeping the economy moving throughout some of the toughest conditions this country has ever experienced.
“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.”
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. 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’ country branches expect 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.
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 said, “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.
“Whilst homes with annexes have always proved popular with buyers for use as an office, gym or ‘party barn’, we’re expecting a surge in demand for this type of property next year. Annexes will be highly sought after and valued throughout 2021 as people continue to work from home and crave a space which sits outside their current residence to do so, essentially allowing them to ‘leave work at the office’, despite that office now is just a couple of metres away.
“Over lockdown annexes have been a saving grace for many who wanted to be close to elderly parents to offer support and company during a difficult year. In addition to flexible living, an annexe can also provide a second source of income to those who wish to rent them out as a holiday home or even as office space to nearby residents.”
Private lettings market
Nick Leeming continues: “Our agents on the ground report that rental prices will continue to steadily rise throughout 2021, as buyers endeavour to have the best of both worlds. Those house hunters who previously lived in a city centre and purchased outside of this in search of a more rural lifestyle and additional space may now want a rental for the few days a week they’ll be required back in the office once the world opens up again. Meanwhile, a surge in short lets is likely as employees are required in business hubs for projects or extended periods of time.
“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.”
Prices of new builds across the country are expected 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 said, “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.”