It’s hard to believe that a year ago, as I wrote my annual predictions, I was happily forecasting that estate agents would ring in 2020 ‘with relish’. After limping through 2019, we thought the stability of the Tory landslide would fuel a buoyant market. Then along came Covid. It forced us to close our doors and rethink the way in which we did business, at the same time turning millions of homes into people’s workplaces. So it’s time to get out my crystal ball for 2021 and offer up my thoughts for the year ahead.

Stamp duty extension

With the country in lockdown and agents facing new challenges, I predict the Chancellor will have no choice but to bow to pressure and extend the Stamp Duty holiday from the end of March. He’s been warned a third of house sales could fall through if he doesn’t and I suspect he will introduce a phasing out period. Otherwise there will be a lot of angry Tory voters who will blame the politicians for scuppering their sales.

Back on the fairground ride

Prepare for the twists and turns of another rollercoaster year. We’ll enter 2021 with people desperately trying to get their property sales through, followed by the stamp duty hiatus, but I’m confident the market will make a strong recovery as we move through the year. The Halifax is less optimistic, predicting lower levels of housing activity and a 2-5% fall in prices.

Brexit will finally bounce

We saw estate agency income take a battering in 2019, in part due to Brexit uncertainties and fears over possible changes to the Bank of England base rate. But now the deal is done and finally we know where we stand. This should give us some long-term stability in the housing market.

Covid vaccine will kick-in

One of the key reasons for remaining positive is that the vast majority of adults will be vaccinated by late spring, according to reports. This will enable businesses to reopen and get people back to work. When the vaccine breakthrough was first announced, a Bank of England survey of 3,000 business leaders found they were more optimistic about their sales prospects and employment opportunities. It’s now a race against time of the virus versus vaccine, injection versus infection.

Job losses more likely to affect rentals

Although economists are predicting that UK unemployment could rise to 7.7% by June, with over 2.6 million people out of work, most of these job losses will be in the lower paid roles in hospitality, retail and manufacturing, which is more likely to affect those in the rental market. This is a terrible situation for everyone concerned and I have full sympathy for those affected. As far as house buying goes, I suspect the main buying market will still be there.

Repossessions will rise

Equally, I feel for those who are going to lose their homes because of the current crisis we’re facing. I predict we’re going to see record numbers of repossessions as we come to the end of furlough and people who’ve lost their jobs can’t afford their mortgage. The Government won’t want to see more homeless people and will need to introduce measures so that home-owners won’t have to hand their keys back.

More investment in second properties

With Government borrowing set to top wartime levels, and total UK debt standing at £2.1 TRILLION, taxes will inevitably rise and there will be a swoop on pensions and savings. The Office for Budget Responsibility has estimated that borrowing will reach £394bn for the current financial year to April – seven times what was originally intended. It’s got to be paid back. With such low interest rates, savvy savers will switch their assets into property instead.

Demand will grow for more space

People will remain working from home, at least part-time. This will fuel the demand for properties with office potential and fast internet connections. Back in May, a YouGov survey found 53% of ABC1 households were working from home full time – a real challenge for people with kids and partners. Studio and one-bed flats in cities will no longer be flavour of the month for purchasers as people will value a spare bedroom that can become an office or study. Or they’ll look for homes with rooms they can rent out through Airbnb for extra cash.

More commercial premises will be converted

With less demand for office and retail space, expect a flood of applications under the extended permitted development rights for conversion to apartments for rental. However, there’s a real concern over the quality of such premises, with many buildings criticised as unfit for human habitation.

First-time buyers will be supported

The new Help-to-Buy: Equity Loan (2021-2023), introduced in December 2020, will make a huge difference to first-time buyers, to get them onto the housing ladder. For those in work, this will surely be a great boost to motivate people to take advantages of low interest rates.

House building will accelerate

Housebuilders are way off the Government’s target of building 300,000 new homes a year, reaching only just over half this number in 2020. Developers will want to get a move on in 2021 and I predict the Government will incentivise builders and invest in affordable housing and infrastructure projects, to drive the economy out of recession, just like the post war years.

Mortgage lenders will relax their rules

Mortgage lenders will have to become more lenient, to help people rebuild their lives. We’re seeing a growth in interest only options, but there need to be more fixed rate deals and support for the self-employed.

Death of the high street

We’re already seeing the curse of Covid on the high street, with big name brands disappearing and empty shops increasing. There’ll be many more small business, restaurants and cafes that will have closed their doors for good by the time this pandemic is over. A day out in town, browsing the estate agency shop windows, will be a thing of the past. Estate agents will migrate to out-of-town hub and spoke branches to reduce costs.

Growth of the Partnership model

I predict that more estate agents will follow our lead at Spicerhaart in growing their fully-employed home-based staff, who will be supported by the branch networks. We extended our haart network nationwide in 2020, with more than 50 people appointed as Partners. Lettings is set to follow suit in 2021. Other large agencies will recognise this is the way forward, without the crippling overheads of the High Street.

Fewer self-employed agents

Who would want to be self-employed right now, particularly if you are new to going it alone and not eligible for financial support? A new survey by the Prospect union found that only a third of people who are self-employed or freelance want to continue because of the impact of Covid on their pay. We’re already seeing this with estate agents who had chosen self-employment under the franchise model. I’ve been inundated with job applications from people wanting to switch and I predict this exodus will continue.

US entrants will struggle

The American agencies are still trying to find their feet in the UK and need to be transparent about their success rate. Look on their websites to see how many properties their individual agents have on their books. Then work out how much money they need to advertise on Rightmove, Facebook and PPC. From feedback I’ve received, they don’t appear to prepare people well enough for running their own businesses, needing an accountant, paying taxes, and all their marketing costs. You’d need £50-£60k to get your own business off the ground in the early days. How many can afford this? I believe they’ll struggle in 2021.

Fee hike from hybrids

As business models go, the low-cost internet hybrid model is a proven failure, propped up by gullible investors who keep pouring their money down the drain. They won’t want to put their hands in their pockets again, so they only way these businesses will survive will be to hike up their prices. I predict some consolidation in the market and I wouldn’t be surprised if two or three will go bust. Latest results show Yopa made a whopping £17.8m pre-tax loss, bringing its total loss to £66m over the last three years.  Many report continued losses. I eagerly await the annual accounts of Strike, formerly housesimple. Let’s see how long they can survive by offering their services for free!

Purplebricks threat needs to be countered

Despite their ongoing losses, Purplebricks will remain a threat to traditional agents who don’t move forward with the times. Unless businesses invest and have better technology than Purplebricks, backed up by excellent customer service, we’ll see more traditional agents going by the wayside.

More investment in social media and Google

I’m detecting a lot of negativity from agents towards the portals and a lot of the people we interview for jobs have been telling us how much business they get these days from social media. At Spicerhaart, we now get almost a third of our leads this way. As for Google My Business, it generated over 282,000 calls for us this year. Is Rightmove the new Blockbuster, not seeing what’s coming up behind them? Marketing is shifting and I predict it will continue to do so in 2021.

Economic recovery is on the horizon

To end on a positive note, the world economy will return to pre-pandemic levels by 2022, according to the global economic watchdog, the Organisation for Economic Cooperation and Development. It may be a year of two halves, but there’s definitely a brighter future ahead.

THE WORLD WILL HEAL.

Happy New Year!