In 2020, everything that we know has been turned on its head thanks to the COVID-19 pandemic. The crisis has had a significant impact on pretty much every aspect of life for everyone. There has been untold fear and uncertainty and some industries and sectors have been completely decimated.
However, as with anything, some managed to get through the worse of the pandemic better than others. One of these is the real estate market. Don’t get us wrong – it hasn’t come through completely unscathed and it has been changed somewhat, but it is still hanging on.
But why? And how? Let’s take a closer look at how the COVID-19 pandemic has shaped the real estate market,
In the initial period of lockdown – the full lockdown – there were some massive impacts on the real estate market. All but essential businesses shut done, and more people than ever before were working from home. Because of this, property rates plummeted, and for a while, it looked like it was going to be a huge housing market crash.
However, as soon as the lockdown restrictions began to be lifted, and normality began to resume, everything appeared to change when it came to the real estate market. Surprisingly, the house prices in the UK hit new heights – the highest monthly rise in 16 years. Prior to the pandemic, it took a house on average 39 days to find a buyer. Now, it is just 27 days.
Why did this happen though? Why, in the midst of an economic crisis and a recession looming, did house prices very suddenly shoot up?
We can probably thank remote working for much of this. More than ever, people are working from home, and this trend does not seem to be going anywhere anytime soon. With this comes an increased need for more space and a place to work in peace. Not only that, but with people being forced to stay at home, there has been a whole new level of appreciation for gardens. Those with no gardens have realised they want a garden, and those with small gardens want a bigger and better one. This is evidenced in the increased interest in bigger, rural properties. Four- and five-bedroom properties are selling 33% faster than they did last year as people look for spare bedrooms to turn into home office spaces.
There has also been a holiday on stamp duty, which is set to run until March 31st, 2021. This has given potential buyers a window in which they can save a significant amount of money on the purchase of a house – good news for first time buyers in particular! Increased government support has also reduced the number of people forced to sell their properties, as has the mortgage holiday scheme.
Will this high point for the real estate market last? Well, maybe. We are not quite sure what is going to happen in the coming months, and all markets, no matter how well they have done will have to find new ways of working and to adapt. Some believe the market will keep on going in a high, while others forecast that this boom, while welcomed, is temporary. The only thing we can do is wait and see where it takes us as we move forward.