Annual Review 2021

Well, that was a heck of a ride! – Looking back at the housing market in 2021


If you were forced to come up with a single word to describe the housing and mortgage market in 2021 you would almost certainly find yourself using some variant of ‘strange’. Let’s not beat around the bush here, 2021 was the oddest year in recent memory and was crammed, almost from day 1 with unusual circumstances, unexpected twists and turns and unforeseen events. In terms of the housing and mortgage space, 2021 has been a bit of a high-speed ride and even the most respected of thought leaders have found themselves clinging on and seeing where the ride takes them at times. It was a year where prediction became almost impossible as the market defied expectations at every turn.


What ‘did’ happen in 2021 for the housing market.

We began the year with a stamp duty holiday still in place. Initially implemented in 2020, Chancellor Sunak introduced it to help get the property market moving after the initial lockdown period. It certainly did that. Despite the third national lockdown at the start of 2021, the housing market was booming. Sales were going ahead in huge numbers. In fact, the stamp duty holiday was so successful in creating a market surge, that by budget day in March it had been extended. Partly this was to cope with the backlog of paperwork in the system after the boost created by the initial surge in sales. In September of 2021 after a phased ending, the scheme finally closed.


For the first time buyer, things were pretty rosy. They benefited from both the government offering of assistance in the form of help to buy and the fluidity of the market. The practical upshot was a 5% deposit requirement and many new and older houses to choose from. As a result, hundreds of thousands of new buyers were able to access the property ladder more easily.


For the existing homeowner, the market had a few additional surprises as well. The boom in sales combined with the stamp duty holiday had a remarkable effect on the average house price. By the beginning of the year, the average house price had risen to just under the £250,000 mark compared to around £232,000 at the start of 2020. At the end of the stamp duty holiday just as everyone quite reasonably expected, this meteoric rise in price slowed. It even dropped a little in June. Then along came the sunshine in August and with it came a surprising price increase again. By the start of autumn, the average house price had risen to an all-time high of just under £263,000.


What didn’t happen in 2021

Top of the list of things that didn’t happen has to be that mortgages did not (as some of the more pessimistic predictions said) become extremely difficult to obtain. It is fair to say that in some cases, such as complications caused by furlough, it was necessary to work a little harder to secure the mortgage some people needed, but it was far from impossible. Despite the worries that the lenders would pull up the drawbridge on lending as long as the applicants could provide the required information, mortgages were still going through just fine. Interest rates stayed low which meant thinking ahead and planning for a potential rise when considering your finances, but we always talk through this with our clients anyway. The bottom line is still the same, if you can afford the repayments, you have the right circumstances financially, and you choose the right house, then you should still get a mortgage.


The other big thing that didn’t happen as of writing this article, is the ‘big bust’ that some expected after the boom of the stamp duty holiday. The price rise may be smaller, but the housing market is still extremely buoyant. Even if we do see a slight drop, for many homeowners, the increase over the year will still leave them in the rather comfortable position of having a good amount of equity in their home.


In summary, then 2021 was a real thrill ride when it came to the housing and mortgage market. However, as we always say, the more things change the more they stay the same. We are still here to guide our clients to the right solution and help them get the mortgage they need. When the market is behaving in such a volatile way and with the unexpected almost becoming commonplace, it’s doubly important to talk to an advisor if you are considering a mortgage. We are only a phone call or an email away if you need us.

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