The property market is always changing and there are a number of things that affect property prices year on year.
In short, the housing market is determined by the following factors:
- Supply and demand
- Interest rates
- Real income
- Demographic change
- Property loans
In 2020, we have seen another large factor that has influenced a change in the housing market.
The Coronavirus pandemic has changed societies and countries around the world – but what exactly has it done to the property market? And what will happen in the next few years?
We take a look at this year’s housing market and project what this will mean for the next few years.
Most people expected COVID-19 and lockdown restrictions to cause a dip in the housing market, however, this was not the case.
In fact, there has been a 1.1% increase in house prices between 2019 and 2020.
After the easing of lockdown restrictions in the summer, many people brought forward their decision to move due to a number of factors:
- First-time buyers moving out of their family home
- Families moving out of the city
- Families and couples downsizing to a more affordable property
- Professionals upsizing in order to have the space to work from home
- Credit conditions
- Furlough, redundancy or affected income
As a result of the rise in house prices this year, first-time buyers are still struggling to get their feet on the housing ladder.
They are in no stronger a position this year than they were before COVID-19.
As a result of such an increase in house prices – a 2.5% increase in London – there may well be a dip in prices in 2021.
What does 2021 have in store?
This year’s increase in property prices has provoked forecasters and analysts to predict a fall of up to 20% due to the ongoing recession in the UK.
Though the Chancellor has announced a stamp duty holiday until March 2021, and house prices are forecast to fall, so will income, which means that first-time buyers, or commercial buyers will be more likely to opt for housing finance, loans or mortgages. Learn more here.
First-time buyers or those on a reduced income will fall behind, while those with money will take advantage, and this could lead to even more inequality and a larger gap in the access to housing.
How to know when to buy a house?
There are a number of things to do that can help you decipher when it is best for you to buy a house:
- Research the market and do the mortgage maths
- Organisation is key: budgeting and tracking your property search
- Familiarise yourself with your debt-to-income ratio
- Calculate whether you can afford the down payment
- Know the interest rates
- Consider the time of year. Find out more.
- Think about the long-term.