2020 Reflection: How Covid Impacted the Property Market & Our Lives
What a year! 2020 brought a global pandemic, national lockdowns, market crashes, a thought-provoking US election, natural disasters, homeschooling and countless deaths nevermind the chances of a no-deal Brexit on the table.
Although, we also experienced astonishing displays of humanity through the Black Lives Matter movement, Clap For NHS and who can forget the rainbows which brighten up streets and towns across the country.
This year came with ups and downs for all of us, and for the property market, too.
Starting the year off strong, the Scottish housing market enjoyed a house price growth spurt in the opening months of 2020. The UK government recorded a 2.1% increase in Scottish house prices in the year to May 2020 compared to last year and a 0.5% month-to-month price growth.
Lockdown Paused Our Lives & the Housing Market
When the Scottish government put us all in lockdown, everyone did their best to stay home and individually do our part to help slow the spread of the virus. Children stopped going to school, travel and public transport reduced substantially, several shops closed, and many of us cancelled our holidays.
When offices closed, some of us started working from home, others were put on furlough, and some lost their jobs entirely. The uncertainty from lost livelihood, separation from friends and loved ones, and isolation made the situation look bleak for a while. On the positive side, it was great to see so many families and individuals get outside to exercise more, I myself was one of those who took great enjoyment in being able to get my two young boys out on their bikes in between the trials of homeschooling!
Since lockdown restrictions prevented us from visiting other households or moving houses unless absolutely necessary, the property market came to an abrupt halt. In March, residential property sales made a year-on-year drop of 14% to 5,765. I have to hope that we never see the residential property market stop the way it did this year, I can only describe it as a full-on emergency stop!
Thankfully, our combined effort to stay home and control the virus, the spread slowed over the next few months and in June restrictions finally eased a little. I think I speak for everyone when I say it was a delight to get to see friends and loved ones again; although from a distance it meant the world to my boys to be able to yet again be able to see grandparents (even if it was over the fence!)
Scottish Property Market Bounce Back
As restrictions eased over the summer, the Scottish property market came back to life much faster than any of us anticipated. Estate agents suddenly became rushed off their feet, and the number of property transactions per month steadily increased. We ourselves saw an overnight increase in enquiries through our website and my wife summed it up like someone turning a tap back on. Although busy, I know all surveyors across the country relished the opportunity to get back out to do what they love after a period of lockdown.
From just August to October 2020, ESPC noted a 44.4% year-on-year increase in new listings in Edinburgh, the Lothians, Fife and the Borders. Knight Frank reports that offers in Edinburgh alone increased by a whopping 141% in the first two weeks of August, and the number of new prospective buyers rose 165%. Viewings increased by 42%, which is remarkable in such a short time.
According to the Registers of Scotland, the number of transactions between April and June 2020 was “greatly reduced” with only 9,387 property sales recorded over those months, (compared with 25,749 this time last year).
From July 15th 2020 until March 31st 2021, the Scottish Government introduced a Land and Buildings Transaction Tax (LBTT) holiday to boost the housing market with Covid-19 disrupting everyday life. As a result, homebuyers rushed to buy their dream homes since the holiday frees them from paying LBTT on properties under £250,000, a £105,000 increase from the pre-COVID level of £145,000.
Home Buyers Changed Their Priorities Because of Covid
When the property market came back to life, it became clear that home buyers changed their wish lists for a new home. Spending so much time at home meant that homes became so much more than just living spaces –– our homes became everything from a workplace to makeshift gyms.
One trend we saw was that home buyers went from viewing four to eight, to three to four properties before making a purchase. On their property wish lists, home buyers now want more indoor space and rooms for privacy, home offices, bigger gardens with space for pets, family-friendly local areas and more.
After months of lockdown and restrictions, crashing markets and separation from our friends and families, the UK and Scotland finally has a vaccine. There is light at the end of the tunnel!
My guess is that the Coronavirus will remain part of our lives the same way as the flu. We’ll return to a work environment where the “new normal” of stricter health and safety measures than before the pandemic. After working remotely for so many months, my feeling is that a lot of people will not return to their offices when they open up again. Dividing teams between the office and remote working will also be part of the new normal for the simple reason that businesses now know it’s possible to manage teams remotely (to an extent).
When it comes to the property market, I believe it’ll likely slow down over Christmas when people focus on spending time with their loved ones in their “Christmas bubbles”. However, I believe we’ll see the market pick up again in January because homebuyers will attempt to complete house purchases before the end of the LBTT holiday in March; and many who may have thought about moving will start the process of selling to take full advantage of the LBTT holiday.
I myself have first hand witnessed what a difference the LBTT holiday can make as one of my dear friends is buying a property, which is due to conclude in January, and will save himself over £5,000. As he has said, that money will go a long way towards a new bathroom in his new home! We can only hope that the Scottish Government will do more to help the property market in 2021 and potentially even extend the LBTT holiday.
This autumn, the government extended the First Home Fund to help first-time buyers get on the property ladder. Applications will reopen in 2021 for purchases completing between 1st of April 2021 and 31st of March 2022, allowing a new wave of new home buyers to get funding towards their first owned property and giving the Scottish property market a new boost for when the LBTT holiday ends.
We can’t know what the future will bring (we learnt that very much this year), but now that we have our first vaccine we can hopefully knock Covid on its head and get our lives back to (new) normal soon. I, for one, am excited to see what the future will bring and see 2021 being a strong year for the property market.
Happy Holidays from Home Report Company
This year came with many headaches, but providing sellers with a Scottish Home Report is one thing you won’t have to worry about with our fast and pain-free process.
We take the hassle out of Home Reports in Scotland and help you build trust with potential buyers by providing clear and easy-to-read documentation for complete peace of mind.
Andrew MacKenzie is a qualified Chartered Surveyor with over 20 years’ experience within the Scottish Property market. He specialises in all types of residential valuations including Home Reports, Private Valuation reports and Development Appraisals.
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