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    2021 in Review: Key UK Property Market Insights

    By The reallymoving Team Updated 4th Apr, 2024

    We look back at the major property events in 2021 and how they might affect the market in 2022.

    2021 has been a year like no other in the property industry. 

    The stamp duty holiday fuelled record high demand, while favourable lending conditions led to unprecedented levels of transactions working through the system.  

    We’ve seen the launch of new housing initiatives, the delay of possible reforms, the continued growth of PropTech, ongoing issues with the leasehold and cladding scandal, and much more besides. 

    As ever, the year will end with the portals receiving staggeringly high levels of traffic and visits as people use their downtime to search for their dream property. 

    Of course, it’s impossible to condense everything that happened this year into a single blog. But here are some of the biggest things that happened in 2021. 

    The extension and then end of the stamp duty holiday 

    The first few months of 2021 were marked by pressure on the government from all quarters – including a petition which received over 150,000 signatures, triggering a debate among politicians – for an extension to the stamp duty holiday, which was originally due to end in March 2021. 

    Eventually, the government relented and announced that the holiday would be extended until the end of September 2021 to avoid any dreaded “cliff-edge” scenarios. The holiday was tapered off and came to a total close from October 1 2021, with the ending already largely baked in and not causing a drastic fall in transactions as some had feared. 

    The success of the stamp duty holiday has been much-debated, but its impact on the property market for much of 2021 was undeniable, driving high levels of demand among all types of buyers, with buy-to-let investors just as able to take advantage as downsizers and second steppers. 

    There have been calls for stamp duty to be scrapped, or wrapped up with other property taxes in a new super-tax, but the money it brings to the Treasury makes this unlikely. 

    The huge growth of PropTech 

    Property got more tech-led than ever in 2021, with the tech revolution continuing to be supercharged by the pandemic.  

    Whether it be Right to Rent checks being carried out remotely, the greater use of instant reservations, the continued use of virtual viewings or a host of PropTech companies stepping in to make the lives of property professionals easier, the growth of the sector is undeniable. 

    According to recent research, investment into the UK’s fast-growing PropTech sector reached record levels in 2021 – and has more than quadrupled since last year, as the sector matures. 

    Analysis by PropTech-focused venture capital firm Pi Labs examined UK PropTech funding round data for 2021 and found that there had been £1.6 billion of investment into the sector so far this year, a huge 360% rise from the £347.79 million seen in 2020 (when PropTech came into its own during the lockdowns). 

    The figure was also more than 15 times higher than the £105.68 million of UK PropTech investment achieved in 2016, evidencing its rapid growth. 

    The use of tech in property was dealt a blow by the devastating Simplify IT hack that took place recently – the repercussions of which are still being felt – and also arguably by the struggles of the online/hybrid model of estate agency, most notably in the recent troubles of scandal-hit Purplebricks

    But, overall, the trend is towards greater use of tech, automation, and digitalisation in property – to speed things up and make lives easier. And this is likely to accelerate further in 2022. 

    More new schemes 

    From First Homes to the 95% mortgage guarantee scheme, 2021 has seen a number of new initiatives introduced by the Boris Johnson government. 

    The success of the former won’t be clear for some time yet – with an expected increase in available new homes in 2022 – while the latter has been embraced by several high-street lenders and major banks, who have been willing to offer low-deposit mortgages again after having shelved them during the worst days of the pandemic. 

    However, awareness of the scheme – or rather, lack of – could be a major problem. A poll conducted in September this year by price comparison site NerdWallet discovered that only 15% of working age people were aware of the government-backed 95% LTV mortgage scheme

    What’s more, the survey also revealed that just 22% of under-25s were aware of how the scheme could help them, while 78% of working age people said they did not have a good grasp of the full support available to help them get on the property ladder, including Help to Buy and Shared Ownership. 

    Worryingly, only 17% of under-35s understood that first-time buyers may not need to pay stamp duty and 19% did not know that mortgage lenders can consider day-to-day spending habits in mortgage applications. 

    These findings suggest that, while lenders are on board and there are more 95% mortgage products available on the market for struggling buyers, the scheme may not be reaching its full potential due to a lack of awareness of the scheme. 

    A strong market for 2022 

    House prices and demand hit record highs in 2021.  

    While the market is expected to cool in 2022 - with no stamp duty holiday in place, interest rates recently increasing (and potentially increasing again) and inflationary pressures on households - it’s still expected to be a strong year. 

    Our most recent forecast, for example, based on an analysis of over 18,000 conveyancing quote forms, shows that demand will continue to outpace supply next year. We anticipate annual house price growth of 2.5% in January as 2022 begins on a strong footing. 

    The current shortage of stock is backed up by low interest rates (even though these finally rose last week to 0.25%), which makes borrowing attractive. 

    The idea of a busy but more normal housing market in 2022 has been backed up by Rightmove, who argue strong buyer demand carrying forward into next year and a bounce back in the amount of homeowners getting ready to sell should keep the market buoyant, if not quite at the same frenzied level as the last 12 months.  

    The market was heading for a ‘less frenetic’ period, the property website said, with a more even balance between buyers and sellers as more homes are put up for sale and higher interest rates take some of the heat out of buyer demand. 

    So, we can expect another busy year for the property market in 2022, if not quite reaching the heights of the past 12 months. 

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