At the beginning of the first lockdown in March 2020, when the government announced that we were to ‘stay home’ and ‘non-essential businesses’ were ordered to shut, the future of housing market looked very uncertain. The housing market was paused temporarily for around 7 weeks between March – May 2020 until it was later clarified that it would be able to continue as long as all of the safety measures from the government guidelines were implemented.

The furlough scheme, mortgage payment holidays, credit card payment holidays, huge numbers of redundancies, businesses being closed down, people not being able to pay their rent during the pandemic meant that there was huge economic uncertainty. This was further exacerbated by Brexit.

The housing market has appeared to have risen above the Covid storm during 2020 like no other economic sector.

One of the biggest surprises since the pandemic started, are that figures show that in from July 2020 onwards, the property market has experienced a ‘mini-boom’ from a flurry of activity which saw property prices in many areas increase rather than dip. This has been attributed to a number of factors such as a change in demand for types of properties and in particular parts of the UK, with more people looking to move outside of London. One of the main factors that have impacted on this trend is the shift to working from home. Those who were previously willing to live in smaller accommodation such as studio flats in a trade off to make their commute to work easier and be able to access theatres, bars, restaurants, galleries and nightlife all be suddenly taken away, makes living this way much less appealing.

In 2020, the South West of England saw the overall biggest rise in UK property values as more people sought more inside and outside space in more rural locations. This trend was sparked following the first lockdown.

The numbers of people putting their properties on the market has also fallen which means that current demand is high and thus impacted on the value of property prices. London has seen record high prices for the cost of the average home in 2020 according to the Land Registry. The demographics of the housing market are changing to reflect the current situation. Existing home buyers are the ones reported to be propping up the housing market rather than first time buyers, as tighter lending restrictions from banks mean that much bigger deposits are required.

One well-documented factor of the unexpected property boom is the stamp duty holiday which is due to end on 31st March 2021, the same time as the furlough scheme. There has been increasing pressure on the government to close down the housing market but with the number of properties that have had sales agreed on them at significantly high levels and the looming stamp duty holiday coming to an end, it is recognised that shutting down the housing market could cause those deals to collapse. This being said, the government have warned that all home moves could be paused at any time in order to manage the spread of coronavirus.

The predictions are that the activity in the property market will slow as a result and that house prices may dip overall in 2021. There are calls for the stamp duty holiday to be extended for a further 6 months in order to take pressure off the stampede of people buying and selling and trying to meet the deadline however this so far has not been granted.

Although the stamp duty holiday would no doubt impact the housing market, there are still a number of positives that would continue to help keep this sector moving. The Covid vaccine that is currently being rolled out could mean that the areas and properties that have seen demand levels drop, such as flats with no outside space in Central London could become popular again. Bank of England base rates that remain low during 2021 would make lending continue to look appealing and a permanent shift towards working from home would allow those to move further away from built up areas which have previously been for those who needed to commute to work. But for the housing market to continue to be permitted to operate during the Tier System and Lockdown has been essential for this sector to continue to remain buoyant.