The end of COVID-19 could be closer than we think. With the Pfizer/BioNTech vaccine now being distributed to certain parts of the population, there is good reason to believe that a return to relative normality is imminent in 2021.
It will, however, be a different type of normality that we return to. Economic policies implemented to safeguard jobs during 2020 will likely affect the UK’s spending decisions and taxation reforms for the foreseeable future.
Some fear the fallout of COVID-19 could trigger a recession – KPMG predict a retraction of the UK economy in Q4 2020 and the OECD warn that the UK could be set for the slowest post-COVID financial recovery of all their 37 member states bar Argentina.
For UK-based investors, there is a clear challenge on the horizon. As a result, investors are naturally deciding which assets are best positioned to provide them with security and long-term capital growth in the new year.
The success story of 2020
There can be no denying the positive performance of the property market in helping the UK economy overcome the initial shock of the pandemic.
The latest analysis from professional body NAEA Propertymark showed that buyer demand has been at its highest level in over a decade. What’s more, Halifax noted that from July to November, the rate of house price growth has been at its highest level since 2004.
Investors are clearly aware of the benefits on offer from investment into bricks and mortar. A recent survey of 1,000 UK investors commissioned by FJP Investment revealed that 51% believe British real estate shall remain a sound investment regardless of Brexit and COVID-19.
This gradual increase of transactions being completed on makes even more sense when considered in conjunction with the Stamp Duty Land Tax (SDLT) holiday.
This holiday, implemented in July and potentially saving buyers up to £15,000 on the first £500,000 of any property value, is due to end on March 31st, 2021.
Seasoned investors have understandably been keen on ensuring they can acquire any new property investments before this key date.
But, as 2021 beckons ever closer, what can the UK Government do to keep the property sector abuzz with activity?
What can be done to ensure that British real estate remains a leading destination for domestic and international buyers?
Maintaining momentum in 2021
As well as being a safe-haven investment, UK real estate remains an asset high in demand and limited in supply. Although Prime Minister Boris Johnson outlined ambitious plans to help balance the scales in this regard, promising a ‘housing revolution’ earlier this year, COVID-19 has understandably taken priority since.
However, as we enter into the post-COVID era; it’s paramount that these commitments are revisited.
Infrastructure spending must remain a core policy commitment for the current government, including the billions that have been pledged for the construction of new-build properties across the country. There is clear demand for such projects, given the imbalance between supply and demand.
I firmly believe that any post-COVID economic recovery has to place property and infrastructure spending centrefold. As well as fulfilling a key election pledge, fuelling such wide-spread housing developments with public funds will be crucial for promoting economic growth and productivity nationwide.
All that being said, I am optimistic that the right decisions will be made by the Government. While there are still plenty of challenges on the horizon, the fact investors are still flocking to property is extremely positive.
Investors want assets that are historically resilient, able to deliver long-term capital growth and able to overcome periods of economic volatility. 2020 has demonstrated that residential real estate can effectively satisfy these conditions.
Jamie Johnson is the CEO of FJP Investment, an introducer of UK and overseas property-based investments to a global audience of high net-worth and sophisticated investors, institutions as well as family offices. Founded in 2013, the business also partners with developers in order to provide them with a readily accessible source of funding for their development projects.