They wouldn’t have known it of course, but an event of unimaginable magnitude would render all predictions void.
Any decent analyst would have tried to factor in Brexit and how that would impact the economy, little did they know that Covid-19 would hit these shores. For much of the year, Brexit was an afterthought.
How we looked back with fondness to the time when leaving the EU was all we had to worry about.
As Covid led to lockdown, the fear, at least the fear related to the housing market (and it goes without saying there were larger concerns) was that house prices would plummet as buyer confidence evaporated. There were also predictions of huge numbers of renters being unable to pay and so landlords running up debt.
It was a grim picture.
However, has this actually been the case? Has there been one overall trend for 2020 or has it been a year of shifting sand?
Here are the biggest trends from 2020.
Resilient House Prices
The resilience inherent in the UK housing market should never be underestimated. Some predicted house prices would drop in 2020 because of Brexit then, when Covid-19 hit, most predicted sizeable drops.
Tabloids ran stories predicting drops of 10%, 15% or even higher by the end of the year - £80,000 off the average value of an average property in London or much of the south east.
The most reliable data comes via the Land Registry’s House Price Index.
At the start of the year, the average property value in England was £248,000; by the end of September it was more than £260,000.
In London the increase was from £477,000 to £496,000 while in the south east it was from £332,000 to £337,000.
Equivalent rises were seen across all property types.
There was a drop everywhere in April and for much of the country in May, but by June, as we emerged from lockdown and the property market reopened, values started to rise once more.
We have now had a second lockdown and many areas are in Tiers 2 and 3 so the data, when available, might show a further slowing across November. However, previous months show us that any dip is likely to be very short term.
Regional Variations in Rental Market
If house prices have remained resilient and generally risen, the same cannot be said for rentals. Landlords have faced many competing factors - there is an observable trend of some looking to move out of the city centre and work remotely from quieter locations.
Many have faced reduced rental yields, either coming to an arrangement with tenants to allow payment holidays or reduced rents, or suffering as tenants fail to pay. A long-term stop to court cases and the halting of eviction processes gave some unscrupulous tenants the chance to withhold payment even though they remained wholly able to pay.
Officially, across London, the increase in rental prices has been a little over 1% and exactly 1% in the south east - among the lowest in the country.
Anecdotally, reports are that the situation has been far worse for landlords, with many slashing rents towards the end of 2020. A recent Guardian article stated rents were down between 4% and 6% across the capital for the year and in some areas landlords had slashed rents by 20%.
This article was prior to the second lockdown and so the fall could be even more severe.
The rental market is more heavily impacted by short term concerns, Most homeowners would happily sit on their property knowing it will go up in value over time, whereas landlords require rent right now, if the best they can achieve 80% of a typical rental yield then sobeit; that’s better than no rent.
In 2020 we have seen fewer foreign students come to study in the UK. We have seen people put off renting to stay living with parents and those currently renting move back in with Mum and Dad. We have seen people place less value on city centre location - it’s less use if you’re working from home and can’t socialise out the house…
For many landlords, 2020 has been extremely difficult.
Government Has Stepped In (and also not stepped in)
To a limited extent, and not necessarily with equivalent force across both the buying and rental sectors, the UK government has shown a willingness to ensure the property market remains buoyant.
After the initial, brief fall in property prices, the Chancellor announced a Stamp Duty holiday, this saving potential buyers up to £15,000 up until the end of March 2021.
House prices were already recovering, but this step undeniably accelerated the increase; it created a sense that now was a good to act, the savings counteracting any natural reluctance towards buying.
The move suggests that the government is always likely to take steps to avoid a housing crash, it is a fair assumption that alienating a lot of homeowners by allowing a crash would not boost reelection prospects.
However, there has been no such help forthcoming for landlords, quite the opposite you could argue - though the Stamp Duty holiday has made it marginally less expensive to add to a portfolio.
Landlords and tenants have had to go it alone, they have had to negotiate agreements and come to their own compromises. Often, this has worked successfully, landlords accepting the plight many tenants are in and so agreeing to reduced rents in a difficult time.
However, other landlords have seen tenants default, they have seen bad tenants become virtual squatters they cannot evict, they have accumulated huge debts yet had no help.
It has appeared that more thought has gone into helping home owners than it has landlords or tenants.
Building on Hold
In many parts of Britain - and none more so than London - there is a need for new housing stock, however 2020 has not been a vintage year in terms of new property being developed. Quite the opposite.
By the end of the year, it is expected that house building will be about 33% down on 2019 figures - this partly because of Covid-19, though developers have also blamed local planning hold-ups. For their part, local authorities have typically said that this isn’t the case, and that many plans with full agreement simply have not been started by developers.
Ultimately, wherever the blame may lie, the new property that is required is not getting built.
Some slack may be taken up by changes to permitted development that make it far easier to get planning for air space development - adding additional storeys on to existing building - but this will not in any way make up the shortfall.
We will go into 2021 with an even greater need for new properties to be built and demand potentially outstripping demand once more.
A Remarkable Year
2020 has clearly been a remarkable year in many ways and taking the wider context into account the property markets have remained encouragingly stable.
We can only hope that 2021 is a bit more normal all round. In our next post we will be looking at predictions for the next year.