It’s been one that will go down in the history books for the right reasons, more generally, given the global pandemic and restrictions that we’ve been living under.
For businesses across the country it’s been a particularly tough year with the localised and nationalised restrictions placed to protect public health. Despite record government spending to support British business, there are many that may not survive the year.
For those of us in the property industry, a mixed year in many ways. The pandemic has brought with it a renewed focus and appreciation of our surroundings and living spaces and, with it, widescale demand for high quality rental property.
Those who earn income from owning and renting property have, in turn, seen their yields and rental demand grow, as well as new incentives from the government to continue to spend on property in order to support and grow one of the bedrocks of the British economy.
Since May, there have been a slew of headlines shouting about record house price growth, record rental demand and DIY stores bursting at the seams with queues around the block of people wanting to improve their living spaces.
So, whilst it’s been a difficult year for everybody, it’s sensible to sit back and say we’ve been extremely lucky to be involved in an industry and asset class robust enough to not just weather the storm, but flourish.
Property performance
Let’s get down to brass tacks then and take a good look at the performance of UK property on the whole across the year.
Firstly, house prices. The Office for National Statistics (ONS) released their data in September regarding the UK market. In it they reported that:
• UK average house prices increased by 4.7% over the year to September 2020, up from 3.0% in August 2020, to stand at a record high of £245,000.
• Average house prices increased over the year in England to £262,000 (4.9%), Wales to £171,000 (3.8%), Scotland to £162,000 (4.3%) and Northern Ireland to £143,000 (2.4%).
• London’s average house prices hit a record high of £496,000 in September 2020.
And to yields then. In summing up the year’s performance, Zoopla observed that yields across the North East and North West were averaging over 7%. They noted that ‘It’s clear that the significantly lower house prices in these areas, coming in well under the national average of £291,055, play a role in the higher yields generated for investors.’
But went on to add ‘Yields are, of course, one consideration for investors and, for those considering their first foray into the buy-to-let market, it is worth considering house price growth forecasts for an area, and whether rents are likely to rise over time’
According to HomeLet data, published on its website, the UK’s top performing region for rental rises was the North West, recording a 6.5% increase as annual rent reached £773. Other strong performing areas included Yorkshire & Humberside (+4.5%), the south west (+2.5%) and Scotland (+1.9%).
Looking to 2021
With all of that in mind, it’s been a hugely successful year in property, and in particular for the north west and Manchester.
Investment is up, demand is up and all of the indicators of growth are up with it. With a strong economy in recovery next year once we begin to return to normality it’s expected that building will increase markedly, bringing a wave of new properties to market.
What should be said is that there are many admiring glances coming from abroad and foreign investment will more than likely come flooding in, so it’s probably wise to set your investment strategy early as competition seems set to be fierce.
