The UK housing market showed its resilience in 2020, with buoyant homebuyers being confident to purchase in an accelerating market.
After the Covid-19 pandemic brought the market to a halt in April, May and June 2020, there was a growth in activity across the rest of year.
A change in homebuyers’ priorities since the start of the pandemic, such as desire for a garden and additional space for a home office, have bolstered the market and kept buyers active, whilst government-backed initiatives have also acted as a catalyst for the market.
Annual growth reaches a six-year high
In Nationwide’s last House Price Index, the positive performance of the housing market can be seen, with the average price growth rising for six consecutive months from July onwards.
House prices in the UK have seen an annual growth of 7.3 per cent, the highest increase since 2014, with the average property price in the UK currently being £230,920. The market’s resilience and ability to bounce back through buyer confidence during the pandemic is key to this growth, with house prices ending the year 5.3 per cent above the level prevailing when the pandemic struck the UK in March.
There has also been a record high in the number of mortgage approvals in the UK, with more than 100,000 lenders approving deals in November 2020.
Market confidence key to accelerating growth
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: “The resilience seen in recent quarters seemed unlikely at the start of the pandemic. Indeed, housing market activity almost ground to a complete halt during the first lockdown as the wider economy shrank by an unprecedented 26%.
“But, since then, housing demand has been buoyed by a raft of policy measures and changing preferences in the wake of the pandemic.”
In light of the pandemic, homebuyer preferences have shifted to meet the needs of staying more often than usual. According to survey of 4,000 homebuyers by Rightmove, 42 per cent of respondents said they now wanted a property with a garden, whilst almost two-thirds (63 per cent) of buyers stated that having access to or having a bigger outdoor space would be top of the wish list. Searches to include a better home workspace have also increased by 36 per cent.
Since we started to move out of the first lockdown in July 2020, homebuyers in both England and Scotland have been able to take advantage of government schemes, meaning now is the time to buy a new home.
The chancellor Rishi Sunak announced a “stamp duty holiday”, meaning rates wouldn’t have to be paid on any house costs less than £500,000, whilst in Scotland a similar initiative was introduced to reduce the amount of Land and Buildings Transaction Tax (LBTT). Both schemes are currently set to complete on March 31, 2021.