The UK housing market has been enjoying/enduring a rollercoaster ride over the past 9 months.
The result of the December 2019 general election brought with it a lessening of the uncertainty surrounding Brexit and improved customer confidence. The start of 2020 showed signs that the housing market was on its way up. Then lockdown brought a sudden famine with viewings at a complete halt, mortgage approvals down 90% and agreed sales running at around 10% of normal levels.
Post-lockdown has seen a release of the flood gates with market activity running at its highest pace for 5 years, agreed sales up 75% on 5 year averages, mortgage approvals at their highest level in 13 years. A veritable feast!
Some of this feast is undoubtedly attributable to pent up demand. Some of the increase will be down to the Chancellor’s stamp duty holiday. And some of the increase will be due to changes in lifestyle, where house moves are driven by necessity of changed circumstance or a desire to live a different life.
But what does all this mean for the Hertfordshire housing market? According to Rightmove, Hertfordshire is one of the top ten areas to have seen a surge in property searches. Increased activity levels have led to an upward pressure on prices. But it is inevitable that this surge in demand cannot be maintained – what with a second lockdown, the stamp duty holiday coming to an end, a weak underlying economy and rising unemployment levels. Analysts are already seeing a chill in the market.
What next for the housing market?
If I could predict the UK housing market over the next 6 months with any certainty then I would be richer than I am! Nonetheless, concentrating on Hertfordshire, I predict a flat market in the -£1m level and a steady rise of 2-3% in the +£1m level.
Why do I believe that prices will not drop off in the prime Hertfordshire housing market?
- In the 5 years prior to COVID 19 there was relatively weak growth in the housing market, so pre-COVID prices were not hugely inflated.
- Immediately prior to lockdown real demand was strong – the lockdown “famine” was created by a freeze on buyers and sellers rather than an economic downturn
- Interest rates will most likely remain low.
- COVID has brought about a shift in lifestyle and consequently a shift in housing needs - property buyers are demanding outdoor space, home offices and more square footage for their family bubbles. Hertfordshire offers value for money, excellent schooling and a slower pace of life whilst being close to London for the weekly/twice weekly trip into the office.
I believe that these factors will keep some pressure on the prime housing market in Hertfordshire and prevent the inevitable recession from pushing down prices.