The stamp duty holiday has been driving the property boom for a number of months. But, as we begin the process of recovery from the pandemic, something else is fuelling the housing market. Kevin Shaw reveals all
While 2020 was an unpredictable year for all of us, the property sector stayed remarkably buoyant, with a sharp boost in buyers and sellers still looking to move despite the lockdown.
In fact, the pandemic may have actually spurred many of those buyers into action, following pent-up demand after the first lockdown and the Stamp Duty Holiday.
In 2021, however, the reasoning behind making a move has changed. Instead, the focus for many is square footage, upsizing to gain more space, extra rooms or gardens for all that time spent at home.
The property industry has seen much anecdotal evidence of homeowners looking to upsize to bigger properties following months spent living, working and schooling from home. But what factors are the most influential on decisions to move to a new house over the last 12 months?
To find out, we surveyed a sample of house seekers looking to move into a new home at the end of 2020 and again in March 2021.
Our findings reveal their reasons for buying or selling, and, on a wider level, how the lockdown and the Stamp Duty Holiday actually impacted buyers and seller’s decisions last year.
The Stamp Duty Holiday is no longer a major factor
In 2020, more than a third of house movers stated that the reduced Stamp Duty rates influenced their decision to move.
Fast forward to February of this year and that number has dropped, with only 14% saying that this influenced their decision and 3% marking it as their main motivator.
Despite the extension to the Holiday, it seems this is linked to the number of house seekers that are looking to get on the property ladder and are considering starter properties rather than fully-fledged family homes.
While the Holiday is good for those wanting to buy a property over £250,000, some, understandably, are looking for a less expensive home for their first purchase. So far this year we have seen considerable activity in the £150k to £250k price range, particularly freehold, where there have been a number of cases of multiple offers from different buyers.
This makes it clear the industry needs to do more to help first-time buyers get on the ladder.
An increase in first-time buyer registrations is also extremely positive for movement in the market overall and we expect to see more interest in this area in 2021.
Taking up space
Working from home has naturally made a lot of people re-evaluate what they are looking for from their homes and how much room they have, for living, working, school life and family life.
Our 2021 survey revealed that 20% of homeowners want a bigger property for their family, while an additional 16% realise they needed a home with more space as a direct result of lockdown.
We also saw the need for an extra room to work as a reason to move in rise by six percentage points between the two surveys, showing how the second and third lockdowns firmed up the idea that working from home is going nowhere in 2021.
With many home seekers having spent the majority of the last year at home due to pandemic restrictions, we also saw less than 5% express that ‘new location for job’ was a prominent reason for moving home.
It’s clear from these numbers that home buyers want to be able to make the most of their time at home rather than feeling cramped, particularly as their housing has quite literally become the centre of their world.
This trend is likely to continue, as a number of businesses have stated that they’re looking to carry on with home working – one study by the Institute of Directors found it to be as high as 75%.
Therefore, the housing market needs to prepare for the continued growth in demand for three-four-bedroom homes with space for a study or home office, above more compact one-two bedroom flats, for the foreseeable future.
What is the picture like across the UK?
While this initial shift in the housing market can be seen across the country, our research also shows that uptake in the Stamp Duty Holiday had far more of an influence in South East and London due to higher property prices.
According to our 2020 survey, buyers in the South East have 85% more to spend on a new property than those in the Midlands, thanks to those higher house prices. This is important when it comes to the spread of those looking to move home.
We’ve seen that one in seven Londoners want to leave the city as a result of the pandemic, according to the London Assembly Housing Committee.
With many looking to move out of cities, they have more money at their disposal, meaning the move to suburbs and areas further afield will likely continue. Estate agents must therefore prepare to reach those buyers with the right property for them with the space that they feel they need to successfully work from home.
It is clear that extra room is an essential consideration for those looking to buy a home.
While the Stamp Duty Holiday had its place in boosting the market through a difficult year, the industry should be looking at the potential for property in terms of the space and size.
Put simply, we must deliver on people’s expectations and needs for the right sized property as they live, work and play from home in 2021.
Kevin Shaw is director, sales, at LRG
