2020 is a year that no one will forget in a hurry. But how has a year that will definitely make the history books impacted the housing industry? In this post, we look at the London property market review 2020 and 2021 forecast.
2020 and the London Property Market
‘When the county initially went into lockdown in March, there was a huge amount of uncertainly surrounding what that would mean for the property market. However, what could have turned out to have been a disastrous year for the market and property prices actually ended up being a year that finished with record mortgage applications, as well as price hikes in many boroughs of London. For example, Islington saw the fastest house price growth for 2020, with the average property rising by 13.4% to £727,922,’ says Lars Gooch, Operations Director at Keatons.
‘On the other hand, some boroughs in the Capital witnessed a decline in prices over the 12 months. However, London property prices rose by 6% overall, which extremely positive, all considered. Added to this, UK mortgage lenders approved in excess of 100,000 mortgages nationwide in November alone, the highest number for 13 years. All in all, 2020 was a huge success for the London Property market. All proving, that even in the most testing of times how resilient the London and UK property market can be.’
The impact of the Stamp Duty (SDLT) Holiday
‘There is no doubt that the stamp duty holiday has played a significant role in making sure that demand and prices didn’t tumble in the Spring and Summer of last year,’ said Lars. ‘The stability and long-term growth of the housing market plays an incredibly important role in the UK economy as a whole and the governments’ intervention with the SDLT holiday was very much welcomed and needed.’
However, additional factors can also be attributed to the success of 2020. These include:
- low-interest rates
- a sudden demand from buyers seeking a home with better workspace and outdoor space
- people simply had more downtime at home to reassess their future plans.
All this meant that the London property market experienced a huge bounce back from June right through to December.
The outlook for 2021
But what does Lars think lies in store for this year?
‘Looking forward, it’s difficult to predict how the London market might fair in 2021. It’s most likely that we won’t see the usual seasonal peaks and troughs for both the Sales and Lettings markets. As with 2020, this year will not flow as it traditionally does in terms of supply and demand. Demand and activity are currently high, however, we anticipate the market to slow as we approach the SDLT holiday end date of March 31st.’
‘With a lull in the market expected by many post-March 31st, it’s also quite possible that later on in the summer transaction levels will kick-start again as the vaccine programme takes effect and unemployment begins to fall.’
‘What we can say with confidence is that London property prices prove to be resilient time and time again. There are always peaks and troughs when it comes to property prices, some more significant than others. However, generally speaking, London property continues to be a good long-term growth asset.’
To conclude, as the economy recovers and the end of the pandemic is in sight, we should see London’s market return to its longer-term cycle. And with a fundamentally strong economy heading into 2022, it’s reasonable to expect London house prices to rise next year and the year after by around 5-10% during that period.
We hope you have found this post on the London property market review 2020 and 2021 forecast useful. If you have any questions, please do not hesitate to contact us.
020 8709 5660