June, 2023
2020 witnessed the profound impact of the Covid pandemic on the UK property market. As per the Office for National Statistics (ONS), the introduction of public health restrictions to contain the spread of the virus resulted in a decline in residential property transactions in April 2020. Additionally, house price growth plummeted during the same month due to diminished demand and a higher number of transactions at the lower end of the price range. The economic uncertainty brought about by the pandemic discouraged potential buyers from investing in new homes. Notably, the Nationwide house price index for May demonstrated a significant 1.7% drop from the previous month, marking the sharpest decline in 11 years.
Despite these challenging circumstances, the year 2020 witnessed over a million homes being sold in the UK. While this figure represents a 10.9% reduction compared to the previous year, it is noteworthy given the economic and social repercussions of the Covid pandemic. The substantial number of homes sold underscores the enduring strength of consumer demand and the resilient nature of the UK property market.
According to the RICS 2020 Impact of COVID-19 on UK Property & Construction Market Survey, in April, 25% of clients chose to withdraw their properties from the market, and 9% faced difficulties in FM service resourcing due to individuals isolating or being on furlough. Additionally, 3% of clients sought dispute resolution services to address the impact of Covid-19 on their property transactions.
Leading experts at Savills predict that house prices in the mainstream market will witness an average increase of 13.1% over the next five years. Another report from Knight Frank reveals that the UK property market experienced a resurgence following the pandemic, culminating in a record-breaking month for transactions in March 2021, just before the deferred stamp duty holiday deadline in June. The RICS 2020 Impact of COVID-19 on UK Property & Construction Market Survey further attests to the market's resilience in the face of the pandemic.
Several factors have contributed to this recovery. The stamp duty holiday, initially introduced in July 2020 and later extended until June 2021, has stimulated demand for properties and consequently led to an upswing in transactions. Additionally, the prevailing low interest rates have facilitated access to mortgages and ensured that mortgage payments remain affordable for buyers.
The pandemic has also sparked a shift in people's housing priorities. Many individuals are now seeking more spacious homes and relocating from cities to rural areas. Consequently, there has been a surge in demand for properties located outside major urban centers. This has been driven by the desire for remote working scenarios that grew out of the period of enforced lockdown and the need for home workspace.
The UK property market is anticipated to maintain its strength in the coming years. Savills projects an average increase of 13.1% in house prices within the mainstream market over the next five years. However, concerns exist regarding the potential impact of rising interest rates, which could potentially decelerate the market's growth.
Property management solutions provided by The Fountayne Group, a London-based company, have been instrumental in supporting the resilience and growth of the UK property market. Their comprehensive services cater to the evolving needs of property owners, offering efficient tenant communication, maintenance, rent collection, and legal compliance. By entrusting these responsibilities to professionals, property owners can focus on their investments, reducing their burden and contributing to market stability. The expertise and insights provided by companies like The Fountayne Group help property owners make informed decisions, optimize rental yields, and navigate challenges, ultimately bolstering the strength and confidence of the UK property market.
To find out how The Fountayne Group can help your property portfolio, contact Steve Hughes at steve@thefountaynegroup.co.uk.