The UK property market experienced remarkable growth in 2020 despite an unprecedented exogenous, and endogenous forces impacting the sector. In residential sales, average UK house prices exceeded £250k for the first time ever, according to Halifax data, whilst in residential lettings landlords benefited from government support such as the furlough scheme keeping tenants employed and enabling stable inflows.
In demonstrating significant resilience, Build to Rent (BTR) proved incredibly attractive to investors seeking long term reliable returns. Occupancy levels and rent collection rates remained high, according to Savills analysis. In fact, CBRE figures show that UK BTR attracted investments of £1.43 billion for a new all-time high in the third quarter of 2020.
These bright spots were counterbalanced by the impact of the Covid-19 global pandemic, such as the rise in remote working. Moreover, inter-regional migration, spurred by a combination of lockdown and tiered living, gave rise to population flows from Prime Central London to Prime Outer London & regional areas. Demand for space and greenery is an abiding trend, with developments inculcating these elements continuing to benefit. Younger workers, in particular, are taking advantage of flexible working arrangements to move further afield in search of rentals providing appealing amenities.
The confluence of factors such as the stamp duty holiday, consistently low-interest rates, and the Help-to-Buy scheme have enabled both first-time buyers and home movers to participate in a flourishing real estate environment. Finally, even though there was greater UK housing supply in 2020 than 2019, with inventories up 18 per cent, according to Hometrack data, there is still a chronic undersupply of real estate assets elevating demand and prices.
In the capital, the Knight Frank Prime London Lettings Report for November 2020 revealed that viewings were 85 per cent above the five-year average. Moreover, the number of new prospective tenants registering was more than double the five-year average during October & November. The momentum in super-prime assets has grown substantially, with lending at its highest level since the third quarter of 2007 and the global financial crisis according to Financial Times commentary.
High demand over the summer has created a sales pipeline that is 50% bigger than a year ago. There are 140,000 more sales in the system than usual creating operational pressure on lenders, valuers and conveyancers, says Hometrack.