During the first national lockdown from March to June 2020, the property market pretty much came to a standstill. With moving home put on pause and property viewings banned for around three months, it’s no surprise that there was pent up demand when restrictions were finally eased in June.

With the second national lockdown set to end on 2nd December, can we expect the same outcome? Or will people have reservations about buying a property in such an unsteady economy? 

In this post, we take a look at the impact that the first UK lockdown had on the property Pomarket, examine the current state of the industry and pull some key statistics from the TwentyCi Property Homeowner Report. Plus, we explain the impact this increased demand has had on self storage facilities like Storage World. 

How is the UK property market doing?

Since the end of the first UK lockdown, the property market has seen some substantial uplift, with new instructions up by 36% and number of sales agreed by 53% when compared to Q3 2019. According to Rightmove, more properties sold in Britain are selling within a week of being put on the market than at any time over the past 10 years.

Whilst pent up demand has in part simply been caused by delays to the sales completion and moving process, there are also other contributing factors to consider. 

Low interest rates

The Bank of England cut the base interest rate to a record low of 0.1%, meaning mortgage interest rates have also fallen. Lower mortgage rates have been passed on to homeowners by lenders as they take advantage of better deals. However - increasing economic uncertainty has led to many mortgage lenders pulling many of their offers, meaning that whilst low interest rates may be available, there are far less mortgage products available, often with higher minimum deposits. 

Stamp duty holiday

In July, soon after the first national lockdown ended, the government announced a Stamp Duty Holiday as part of efforts to keep the UK economy moving. The Stamp Duty Holiday means that buyers of homes worth up to £500,000 pay no stamp duty, whilst homes above that value can benefit from a reduced rate. The initiative is currently set to run until the 31st March 2021, but there are already calls for it to be extended. 

Change in customer preferences

The pandemic has led to a rise in customer demand for properties in rural areas with small populations. Many homeowners have decided to relocate due to health concerns and the open space that remote areas offer. 

In October, the number of sales agreed in 2020 had already surpassed the whole of 2019. Whilst exchanges are down 40% compared with 2019, this is likely due to delays thanks to the conveyancing hiatus caused by lockdown. The increase in people needing mortgages, surveys and searches will have no doubt caused delays once lockdown was lifted, meaning we may see a surge in exchanges during the penultimate months of 2020. 

What does another lockdown mean for house prices?

With pent up demand comes inflated asking prices. The average UK asking price has risen by £31,000 this year compared to 2019. A healthy increase in house prices extends to the majority of the UK. 

In October, annual house price growth hit a 5 year high of 5.8%, according to building society Nationwide. But will prices continue to soar, or are we headed for a huge drop?

2020 has been a tough year for many. The closure of businesses has inevitably led to redundancy and unemployment has continued to increase over the past eight months. The second lockdown forced many shops, hospitality, beauty and leisure businesses to shut their doors once again, which will only fuel the country’s economic decline.  

Substantial price drops in the property market are usually due to a high volume of forced sellers - people who have to sell quickly because of an unexpected change in circumstances, such as losing their jobs. Sadly, it’s likely that we’ll see house prices fall in 2021 as we continue to see the full impact of the pandemic and resulting lockdowns. 

It’s possible that we haven’t seen this drop yet due to the furlough scheme and mortgage holidays, but with continued financial upheaval, and such schemes set to end in Spring 2021, a fall in house prices is somewhat inevitable. 

Will there be pent up demand for property post lockdown?

Whilst the property market was put on ice during the first UK lockdown, it has remained open during the second. This means that there is likely to be much less pent up demand in December than earlier in the year, although social distancing measures, safety concerns and a substantial increase in Covid-19 cases will no doubt have caused disruption and slowed the completion process down. 

Government incentives may fuel a surge in first time buyers, as the Stamp Duty Holiday continues into Spring 2021 and the ‘Generation Buy’ scheme comes into effect, offering low deposit mortgages to help people purchase their first home.

Renters, who are perhaps in a better position to relocate in a short time frame, may also have contributed to the demand for property - looking for cheaper accommodation to cut down monthly outgoings is a very reasonable response to financial uncertainty. 

So, whilst the property market as a whole is likely to calm down as pent up demand fizzles out, there is still hope for a busy year ahead for those working in the sector, thanks to more opportunities for first time buyers and the priorities shifting as a direct result of the pandemic.

Those in the self storage industry will no doubt find themselves in a similar position. According to SSA UK, 32% of self storage customers are home movers. If people are moving home, they’re likely in need of storage, and that means a positive impact for numerous industries. Storage World provides storage solutions across three locations in the Greater Manchester region, with various sizes available to suit all needs - making the process of buying a new property more manageable.