Did anyone get their predictions for the 2020 property market right? I suspect not. We’d barely heard of Covid back in January last year and, if we had, we would have probably written off the housing market for half a decade.
But look at property now. Prices are up 5 per cent on average and so too is the volume of sales: £62 billion of extra transactions according to Zoopla compared to 2019. And that's despite the economic hit we've experienced over the last year. I’d suggest the upward trajectory will continue, albeit with a few wobbles. This market movement is being driven by macro factors, not local ones. Low interest rates and economic optimism surrounding a 2021 vaccine could mean continued growth. U-turns on planning policy and delays in house building caused by the first lockdown will mean demand will continue to outstrip supply for some time. The priorities of many home owners have changed drastically in 2020, providing plenty of impetus to plan a move.
That doesn’t mean prices will grow everywhere. Urban areas are still finding their pricing level. They’ve probably begun to bottom out now though. When it comes to making your decision as to whether to buy, move up or even purchase a second property consider these key longer-term issues.
High speed internet connectivity is essential. Public transport nodes will drive local markets despite the move towards working from home; people need a backup plan should office working return at a later date. Repurposing of real estate will provide opportunity as offices are increasingly changed into residential properties. There remains a premium on outdoor space.
Here are my five top calls for property investments in 2021:
CrossRail and the Elizabeth Line
If you are in London or the South East, look again at the stops on the CrossRail and Elizabeth Line. This much delayed addition to London's tube is due to open in 2022 (bar any more delays) and will drive demand in the capital for some years to come. Now's the time to invest. In town, investigate east around Whitechapel or Maryland and west around Acton Main Line. You’ll get more for your money and find some outside space.
Leaving London? Look at Berkshire
If you want to move out of London, the biggest opportunity presents itself around the stops to the west in Berkshire. The travel times into the centre of town are manageable, especially if you’re not going to be required to work in the office five days a week. Travel times to central London will shrink. Value for money and quality of life and housing is significantly better. Look around Maidenhead, Twyford and Iver.
The seaside locations will continue to rise in popularity. If you have some time at home or want a better work/life balance where better than the English seaside? And there’s a lot of value to be found in many neglected or overlooked towns. Steer clear of Brighton, it’s fully priced, as are the established seaside towns such as Southwold or Aldeburgh. Look into Kent (Whitstable, Broadstairs, Romney or Dymchurch) and Essex’s coastline towns and villages (Maldon, Chalkwell, Frinton-on-Sea or Walton-on-the-Naze).
If you’re prepared to have a longer commute, Diss in Norfolk is 1hr 40 on the train from London. Property prices are such that you could buy a three-bedroom Victorian terraced house with off street parking and a garden for under £300k.
The Northern market
Around the country satellites to the bigger towns and cities will continue to grow in popularity. A two-bed apartment in a city centre, normally translates to a three- or four-bedroom house outside. And that will come with outside space too. Expect a big push to repair the northern towns and cities and if work takes you to Manchester, Birmingham or Leeds… buy rather than rent. The Manchester market, in particular, has been delivering a healthy return for some years. But if it's space you're after, don’t neglect the towns and villages that surround these big cities. You’ll get more for your money.
For quite a while now there’s been a huge push to build new homes. Of course, this sometimes presents a buying opportunity if the developer has a rump of a development to sell. But these markets move differently from others because they take a while to establish themselves. Period property has been neglected for a while and presents the greatest uplift potential. There seems not to be an appetite to do work. But there’s a huge benefit in upgrading, extending or refurbishing a property if you have the inclination and resolve. It can be good fun as well.
Snap up an urban bargain
Longer term, if you can wait, towards the end of the year, expect central urban locations to begin to regain their composure. After the mass exodus to the countryside, they will start to look cheap. When shops and restaurants re-open and people begin to remember why they lived in an urban setting, especially for the younger crowd, there may be a deal or two to be had. Particularly if you’re prepared to buy a period property that needs some work.
James Max is a qualified chartered surveyor and presents the Early Breakfast Show every weekday on TalkRADIO