Here
are a few reasons why it will not be the crash some are predicting
During 2020 the North Nottinghamshire (and UK) property
market has resisted and flouted every economist’s prediction. With the economy
a shadow of its former self, unemployment set to hit 11.9%, the Government on
track to borrow nearly half a trillion pounds to pay for Coronavirus support
packages etc.
This has had very little effect on North Nottinghamshire
homeowner’s enthusiasm or capability to want to move home. It highlights the
influence of both the emotional impact of lockdown and the opportunity to save
money on stamp duty.
During 2020 the North Nottinghamshire property market has
been like a racehorse.
The question is will the horse fall at the 2021 fence
or will it coast home pass the finishing post and get ready to win another
race? What are the odds?
UK
house prices are 4.7% higher than they were 12 months ago according to the Land
Registry, whilst in North Nottinghamshire they are even higher.
Looking at the data over the country, things overall are
looking good for property prices.
Yet it must be remembered the Land Registry
data is from completed house sales and is always a couple of months behind, so
this data is for house sales up to September that were agreed in the spring.
Also, it does not take into account the prices being paid today on North
Nottinghamshire homes (as they will only show in statistics the Spring and
Summer of 2021 when the sale completes).
North
Nottinghamshire house prices may inevitably ease slightly in 2021
Anecdotal evidence over the last few months has suggested
buyers are using their Stamp Duty savings on the price they are prepared to pay
for the North Nottinghamshire home of their dreams, so when the Stamp Duty
holiday finishes in Spring 2021, we will see a reduction in the price North
Nottinghamshire properties sell for, as buyers will now have to hold back some
of their cash to pay the Stamp Duty Tax. Maybe.
The ‘Chain’
bottleneck problem
I do have apprehensions that many North Nottinghamshire
people, buying and selling their North Nottinghamshire homes and in a chain,
may not be able to realise the move before the Stamp Duty rules change at the
end of March 2021, as there is a massive backlog with mortgage lenders, local
authorities’ and the searches, chartered surveyors surveying the property and
solicitors with the legal work, all combining to slow down the house selling
and buying machine.
If you are in a chain right now, you must constantly be
talking to all the parties involved and ensuring everything is focused on
getting the sale complete by the end of March. You have a responsibility to get
information requested back in hours, not weeks... because if you don’t, you
might not get your North Nottinghamshire home move through before the end of
the stamp duty holiday, and without that discount, someone in your chain may
pull out of the sale altogether and the chain will break.
The
number of people moving home in North Nottinghamshire is anticipated to drop after
the Stamp Duty holiday ends at the end of March 2021.
And that is probably going to be the biggest impact on
the North Nottinghamshire property market in 2021. Yes, there will be a slight
readjustment in the prices paid after March 2021 (as mentioned above), yet a
reduction in the number of people selling their North Nottinghamshire home does
not inevitably lead to a house price crash.
Yes, there will be a number of people who have to sell in
2021 because they have lost their jobs (i.e. ‘forced sales’). In the last two
‘Property Market Crashes’ of 1988 and 2008, there were a large number of forced
sales in a short period of time (because business owners had to sell their home
as their business had closed because of the Credit Crunch, as well as people
who had lost their job), increasing the supply of properties coming to the
market in 1988 and 2008.
But this time, we have had the cushion/parachute of
Bounce Back Loans, Furlough and Mortgage Holidays over the last 9 months.
Also, another important factor about the last property
market crashes were the levels of interest rates and the amount borrowed.
Interest
Rates are the key to the future of the North Nottinghamshire property market
In 1988, mortgage interest rates were an eye watering
11.5% and 6% in 2008, meaning mortgages were much more expensive compared to
the VERY LOW rate we have today. Also, with 77.2% of mortgagees with fixed rate
mortgages, and only 1 in 21 mortgages owing more than 90% of the value of their
home (and 1 in 303 mortgagees owing more than 95% of the value of their home),
negative equity should not be so much an issue like it was in 1988.
This
means most North Nottinghamshire homeowners are in a much better place to
weather the storm of 2021, than they were in 1988 and 2008
I also believe there will be ‘interesting investment
opportunities’ to be had for North Nottinghamshire buy to let and commercial
properties in the latter half of 2021 with the potential changes in Capital
Gains Tax regulations, although those won’t go on the open market, so do keep
your ear to the ground so you get to hear of the property portfolios coming up
for sale (as they tend to sell ‘off market’). Again, if that’s something that
interests you - do drop me a line.
So,
where is the North Nottinghamshire property market heading in 2021?
Well, the North Nottinghamshire property market has seen
a house price growth since 2009 and this has been fuelled on the back of ultra-low
interest rates meaning money is still cheap to borrow and so mortgage payments
are low.
With the Bank of England pumping £150bn into the economy
in November with Quantitative Easing (QE) to add to the £725bn they have
already spent on QE since 2009 – interest rates will continue to stay low for
some time. Interest rates will probably remain VERY LOW in 2021.
Supply and demand shows that whilst we will probably have
a turbulent choppy ride in the 2021 horse race, long term demand for housing
outstripping supply since the 1980’s, will continue to keep the horse and rider
running well.
The long-term outlook for the property market in North
Nottinghamshire looks good.
Thanks for reading
The Good Estate Agent - North Nottinghamshire.
I help sellers, buyers, landlords and tenants.
If you think I might be able to help you please drop me a message.
geraldbowers@thegoodea.co.uk
☎01777 237310 ☎ Messages to ☎07981 744003 ☎
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https://www.facebook.com/thegoodestateagentnorthnottinghamshire
