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After record-breaking activity through the second half of 2020, conveyancing departments remain extremely busy as buyers push to complete before the end of the Stamp Duty Holiday on 31 March. However, the housing market generally has calmed in recent weeks from what has been a sustained feeding frenzy and the question many are now asking is what the rest of 2021 has in store.
The Royal Institution of Chartered Surveyors monthly market survey reveals that despite the housing market remaining open during this third national lockdown, activity was down in January compared to the buoyant end to 2020. Yet that belies the fact that last month was still busiest January on record.
Supply vs Demand
As with any market, the housing market is a tale of two factors, supply and demand, or sellers and buyers. Tap into their collective thinking, and we might begin to gain an insight into where things are heading.
Rightmove reports over 211 million visits to its website in January, totalling more than 1.6 billion minutes in search time; an increase of 44% on the same month last year. Their busiest single day was at the tail end of the month on Saturday 30 January, with over 60 million minutes recorded. And it seems this was not merely the result of aimless browsing, with 7% more buyers contacting estate agents through Rightmove last month than in January 2020. This increase in agent enquiries is particularly encouraging as these are now prospective buyers who are not stirred to action solely by a desire to save Stamp Duty – people recognise that particular ship has sailed.
So far, so good, but here’s the rub, Rightmove also reports the number of new properties coming to market is 21% down on the same period last year and considerably less than current buyer demand.
Lockdown remains a challenge to moving home
In more normal times, supply is driven by demand, but as we are all too well aware, these are far from normal times. Anecdotally, estate agents cite the challenges of lockdown as the reason many people do not currently feel able to market their home. In addition to juggling work with home-schooling, there is, understandably, less enthusiasm for allowing strangers to wander around your home, whatever precautions are in place.
Then there is economic uncertainty, the continued scarcity of low-deposit mortgages, and a growing reluctance to commit to moving until there is a better indication of what might happen to prices as the pandemic eases.
Taken together, it seems probable that the market will continue to contract as we move into the second quarter of 2021, although we should not forget that it’s moving down from a very high base. Beyond that, agents seem confident that we will begin to see the market stabilise in the second half of the year as lockdown and social distancing restrictions start to ease.
Watch this space!