Home Featured The Ups & Downs Of A Housing Market During The Pandemic

The Ups & Downs Of A Housing Market During The Pandemic

by Keerat

By James Forrester, Managing Director – Barrows and Forrester Estate and Letting Agents


Well, you’d be forgiven for thinking that a sweeping virus that has infected over 130 million people and killed almost 3 million of us, would somewhat deter interest in buying property. But you’d be wrong, certainly as far as resulting values are concerned.

Remarkably, the planet’s response to the biggest health crisis since the Spanish Flu has been to double down on property. In fact, when you look at each country individually you’ll see some incredible outcomes with hardly any seeing a reduction in house prices at all. Of the top 56 countries that I’ve analysed only Malaysia, Hong Kong, Spain, Hungary, Morocco and India have seen a decline in property values.

The nation’s where the property market is shrugging off Covid like a common cold include Turkey up 30.3%; New Zealand up 18.6%; Slovakia up 16%; and Russia up 14% – between Q4 2019 and Q4 2020.

This is pretty incredible, all things considered.


So What Of Domestic House Prices? – How Has Blighty Fared?

In the global pecking order of things, the UK runs twelfth with an average house price rise of 8.5% in 2020. This in itself is an admirable outcome but especially when many so-called experts here were forecasting falls in values of up to 35% (you know who you are). The question is, why did price growth perform so strongly in the face of biological meltdown? And what’s to come?

The first thing to point out is that we’re a pretty resilient bunch where property ownership is concerned. It’s stamped into our mitochondria that we should buy and own our home rather than rent having been instilled in us generation after generation. This then forms a solid foundation in keeping demand constant as even the wokest of millennials scramble onto the housing ladder before they think it’s about to be pulled up out of their reach forever.



Then, there are interest rates. They are quite ridiculous in their negligibility. I’m still old enough to remember the ‘normality’ of mortgages costing 10% per annum whereas thanks to years of sub 1% Bank of England rates a typical mortgage can now be procured for less than 2.5% in yearly interest. That kind of discount makes for a huge improvement in affordability and is what’s really driven property values in the last decade or so.

Despite the shudder that trickled down the spine of estate agents across the land in April last year as Boris Johnson announced the closure of the housing market, our angst was short-lived as Rishi Sunak’s sharp elbows brought about its opening again in May. What happened next was an immediate ‘catch up’ with buyers pushing hard to buy again – making up for lost time as such.

And even though the market had bounced-back rapidly, Rishi then also added something in the way of fuel to the fire for good measure – a stamp duty suspension whereby all transactions to a value of £500,000 would be ‘tax free’, saving even high-end buyers up to £15,000. This was the literal blue touchpaper that Firestarter Sunak, as I affectionately call him, blessed the property industry with.



This stamp duty respite was due to end in March but our pyromaniac Chancellor has just opted to extend it further to the end of June this year. Explosive stuff.

And in all of this, it’s not just values that have risen but transactions too. A lot…

The latest HM Land Registry data says that in February 2021 there were a total of 147,050 property sales. That’s 48.5% higher than in February 2020 before the pandemic was ‘a thing’ and the most for 10 years.

So, 2020 saw a big boost in house prices and transactions despite the pandemic, due to our insatiable appetite for real estate and is now empowered by cheap debt and government stimulus. On the latter point, if you haven’t got it by now, this Government is determined to use the property market as one of the tools to help the economy recover fast. Positive sentiment amongst home-owners also means confidence to buy things, supporting consumer spending.


But Can It Last?

Well yes. Interest rates may even be set to go negative soon which will mean that mortgage payments get cheaper still. We may see a typical standard variable rate mortgage at 1.5% – crazy cheap by historic standards – and lenders will be keen to take advantage of buoyant demand and we’ll probably see a relaxation of their caution on lending criteria during 2021.

House prices will continue to increase therefore, for the foreseeable and especially if the interventionist tinkering in Number 11 Downing Street continues as I think it will.

Now, even the doomsters of early 2020 are agreeing with me that in spite of furlough and economic uncertainty as the UK unlocks, house prices in this country will be higher in a year’s time than now. And to think that we’ll probably end up in the middle of the world table for 2021 house price rises as global economies all fight to ensure their respective GDP growth.

My advice to any would be homebuyer is…. don’t wait. Because for those that do, based upon the average UK house price, you could well be £20,000 worse off if you do. Just like you are now compared to last year, pandemic or otherwise.

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