We're not going to pretend that 2020 has been a particularly good year for anyone. The coronavirus pandemic and accompanying economic uncertainty have hung heavy over many areas of life. And, to make the situation more strange, the final stages of Brexit, and the changes that will bring, are drawing nearer.
You've probably seen lots of headlines giving predictions of booms and crashes in the property market, or more generally about economic uncertainty in the UK. And, the property market is intimately tied into the economic changes the UK is facing. So, what does this mean if you need to sell your home this year?
In this article we take a look at the UK property market and how it's fared this year - along with some predictions about what's going to happen over the next few months. We hope this will help you figure out whether 2020 is a good time to sell your house.
What we've found is that 2020 - despite it all - might not be a terrible year to sell your home, as long as it fits in with your personal goals too.
It's important to say that although we'll be covering the conditions in the property market in 2020, it's just as - if not more - important to consider whether it's the right time to sell your house on a personal level.
Does it fit in with your financial and personal goals? Are you desperate for space, or need to release equity? Questions like these should be considered with as much importance as the general conditions of the housing market.
You shouldn't ever feel pressured to sell (or not sell) just because of market conditions.
One of the first worries many home movers have after big economic events is about house prices. It's common to be anxious that you're not going to get as much money as you'd hoped for, or to wonder whether waiting for greater stability will boost your chances of getting a good price.
What's happening with house prices at the moment?
Perhaps surprisingly, house prices are continuing to grow.
There are a number of industry leaders who produce 'House Price Indexes' each month. These indexes are essentially trackers for house prices. You can see how house prices have changed month-to-month, and year-to-year. The most well-respected indexes come from the Land Registry, the major banks, for example: Halifax and Nationwide, or from property portals, like Rightmove and OnTheMarket. They all use different sets of data, which means there are some differences in their results, and you have to be cautious about taking the findings of one index as gospel. However, together they all contribute to create an overall picture of the health of the property market.
Currently these house price indexes are showing that home prices are rising.
Most recently, Rightmove released their report. They found that the market was experiencing an 'unexpected mini-boom'. Using information on the asking price of all the houses listed on their website, they found that prices are currently 2.4% higher than they were in March 2020 (pre-lockdown). This is even more incredible, given that the pre-lockdown period was generally seen as a booming period too, with many people coining the term 'Boris-bounce'. Asking prices up North are showing even better growth. In Yorkshire and Humber, prices have seen an average increase of 4.1% since March 2020. This is a clear demonstration of estate agent confidence in the market, and suggests positivity for the future.
The latest house price index from Halifax shows a slightly different picture. It shows that prices have declined month-on-month between June and July. But, it's not all bad news. Prices were still 2.5% higher in June 2020, than they were in June 2019. Nationwide's House Price Index showed similar findings.
There are a couple of reasons for the differences between Rightmove and the banks' indexes. Firstly, the data used by the banks is based on sold price, not asking price. Secondly, the banks' latest indexes came out before the recent changes to Stamp Duty, which have massively increased confidence in the property market.
Why are house prices still going up?
House prices are still growing because there's a lot of buyers looking to move home in 2020. This is for a number of reasons:
People have spent a lot of time at home in 2020, and many have realised that it no longer meets their requirements. They want somewhere bigger, or in a better location, and many renters want to take the first step on the property ladder.
Lockdown meant that not many people could move house - even if they wanted to. Now the housing market has reopened, this 'pent up' buyer demand has been released.
Temporary changes to Stamp Duty have made moving house more affordable. The Chancellor Rishi Sunak has recently announced a temporary 'holiday' for the Stamp Duty Land Tax on properties below £500,000. This means buyers won't have to pay the tax on property purchases up until the end of March next year. This could save buyers up to £15,000, so understandably, many people are interested in purchasing now before this saving ends. Similar measures have also been brought in in Scotland and Wales too.
Importantly though, property prices don't just increase because there are lots of buyers looking for a new home. They also rise when there aren't enough sellers to satisfy all this increased demand. When there are more buyers than those looking to sell, the competition to get the best properties drives up prices.
Recent estimates suggest that the total number of homes on the market is 13% less than the number of buyers currently looking to move. Meaning there are quite a few buyers for each property currently on the market. This means the conditions currently are perfect for house prices to rise, and for sellers to walk away with more money in their pocket.
Will this change soon?
Many industry commentators do believe that this 'mini-boom' in the housing market will be short-lived.
In part this is because the changes to Stamp Duty are only temporary - and this has been a key driver in encouraging more buyers to the market in 2020. The Office of Budget Responsibility predict that Stamp Duty changes will increase house prices by at least 0.5%. Once the holiday ends, this boost to house prices will end too.
There's also a worry among industry leaders about what will happen once the government support schemes - such as the Coronavirus Job Retention Scheme - come to an end. It's likely that there will be a number of people who become less financially secure, and as a consequence, less likely to make big financial decisions like taking out a mortgage or moving home.
Ultimately, no one can be sure what the future of the property market holds. There's definitely potential for the rate of growth we're witnessing to slow down, so if you're looking to sell, it could be risky waiting for 'better' market conditions. From a house price perspective, 2020 looks like a pretty good time to sell your home.
If you're curious about how much your home is worth, but not sure you're ready to meet with an estate agent, get a free and quick online estimate here.
Although you may not need a mortgage yourself, it's useful to get to grips with what's going on in the mortgage market. Understanding this can give you insight into the way home buyers are likely to interact with the property market.
The greater the availability of mortgages and low interest rates, the more people will look to buy a house. If there are few mortgage products available, or they all have high interest rates, you'll likely see fewer buyers entering the market.
In terms of the mortgage market currently, the situation is mixed. Most mortgage products currently available have low interest rates, but there aren't many mortgage products available. Research by advisory website Money To The Masses found that the total product count has dropped from almost 5,000 options in January, to less than 2,750 in June.
Alongside this, the criteria for applying for one is getting stricter. You're likely to need a 15% or 20% deposit now, rather than the 5-10% deposit that was becoming the norm at the end of last year.
This means that it's still quite attractive for buyers to take out a mortgage if they can afford to. Those who are making their second move will be able to use the equity they've built up in their first home to put towards a deposit and take advantage of the attractive rates.
On the other hand, first time buyers, and those without access to a larger deposit might find it harder to buy a property. Read more about mortgages.
It's difficult to know what the exact impact of the end of the Brexit transition period (December 2020), will be on the UK, let alone the property market. And, as a general rule, anyone telling you they know exactly what's going to happen shouldn't be taken too seriously.
Some are predicting that Brexit will affect the economy's recovery from the impact of coronavirus, whereas others think it'll usher in a new era of economic possibility. It's hard to say anything for sure until we have more details about trade deals, and the continuing impact of the pandemic.
We can suggest that there might be a change in the amount of foreign investment into businesses and property in the UK, and the housing market could feel the knock on effects of that.
For example, a government report from 2017 found that 56.2% of foreign-owned businesses in the UK were European. If new trading rules come into place, some of these companies may choose to relocate, or change the extent of their physical presence in the UK. This would impact the nature of large commercial centres like London, Manchester, and Birmingham, and in turn, the demand for homes in these areas.
However, this change in demand might be delayed until 2021 because of changes to Stamp Duty introduced by the government. On April 1 2021, the government will introduce a 2% Stamp Duty surcharge, on top of the standard tax rate, for all overseas buyers looking to buy a property in England or Northern Ireland.
It wouldn't be unreasonable to suggest that we might see a flurry of foreign investment before this date, and then a slow decline as the UK becomes a more expensive prospect for overseas investors, and the impact of Brexit becomes more apparent.
The good news is that despite it all, 2020 isn't actually a terrible time to sell your house in the UK.
If you're thinking about selling your home now, you've got the following things going for you:
Both Rightmove and Zoopla have seen massive increases in the number of buyers making enquiries about homes for sale. Many estate agents are witnessing a similar phenomenon.
But demand isn't the only factor that makes a market right now good for sellers. There are also fewer homes on the market than buyers, meaning conditions are great for getting the best price for your home.
Although there are fewer mortgage products available, for the right buyer, the UK's current low interest rates can make buying a property enticing. This is particularly the case for 'second steppers' - who have built up equity in their homes, and can use this to contribute to a deposit.
Sometimes moving house is a necessity. Maybe your family is expanding, or shrinking, or maybe you need to relocate for a job or to be closer to relatives. And, many other people are in the same boat. Life doesn't always flow at the same rate as the economy, so neither does the property market.
There are a lot of unknowns about the next few years, for example: the end of the Stamp Duty holiday, the end of the Brexit transition period, and the full extent of the economic impact of coronavirus. If you need to sell your home in the near future, waiting for better conditions is risky, and could lead to you having to sell in much worse conditions.
Ready to make the move? The first thing to do is talk to an estate agent. They'll be able to provide guidance tailored to your personal situation. To find, and book a chat with, the best estate agents in your local area, check out this comparison tool. It uses data to compare the top-performing estate agents in your neighbourhood.
It takes 2 minutes. 100% free. No obligation.
Copyright © 2021 GetAgent Limited
We are a company registered in England & Wales, company number 09428979.