Will residential markets see pent-up demand spring forth in 2021, or will sales be sluggish as Covid-linked job losses and Brexit uncertainty make investors cautious? Place North West asked industry players how next year will pan out for housing.
City living and build-to-rent
Like offices, city living came under the spotlight in 2020. So how might things look in 2021? Developers including Simon Ismail, managing director of Salboy, which is building homes at Castle Irwell in Salford, and elsewhere, are bullish.
“I can only see all [residential] markets getting better and better as we go through next year,” Ismail told Place North West. “We are not altering our business plan – the demand for property we have seen in the last six months is not a bubble, there is sustained demand and the opportunities the city presents are not going away.”
Private rented sector (PRS) schemes have been prevalent in Manchester and in Liverpool, where Moda’s The Lexington at Princes Dock topped out this year ahead of a planned 2021 completion – one of three towers soon to be reaching skywards at Liverpool Waters.
Also positive is Anthony Stankard, managing director of estate agency Reside. He said: “I’ve never been as busy as in this last seven months – not something you would expect in a global pandemic. We have been averaging one reservation a day at new-home developments throughout Manchester.”
However, he notes that much of this “frenetic activity” has been driven by the 15 December deadline for the extension of Help-to-Buy. “The new upper limit of £224,400 coming in next March is not going to help the city centre’s new-build market and I expect to see a sales market driven by couples pooling salaries and the Bank of Mum and Dad once again replacing Help-to-Buy in 2021.”
According to Euan Kellie, founding director of consultancy Euan Kellie Property Solutions, the old adage that residential is a safe bet may still hold true, even in challenging times. “BTR has been a strong property sector for investment this year, and this also needs to be put in context against other asset classes that have had a difficult 2020 and are likely to face further challenges in 2021.”
Phil Dolan, managing director of Anwyl Homes Cheshire and North Wales said: “We remain optimistic. I believe we are now safely through the initial period of pent-up demand caused by Covid and our net reservations per week continue to exceed expectations. We are seeing strong demand for new homes outstrip supply on pretty much all of our sites.”
For Paul Jones, managing director of Preston-based Kingswood Homes, the way that homes are bought and sold is likely to be biggest area of change in 2021.
“The past nine months have accelerated the residential property industry’s alignment to more modern methods of digital retailing,” he said. “We are retailers, and customers’ expectations of buying property is akin to other lifestyle purchases.
“They want more choice and more real-time interaction in the buying process. This will become even more apparent as we move through 2021 and I believe it is SME developers that will lead on this.”
Jones believes this empowering of consumers goes through to the design stage: Kingswood is among those enabling customers to design layouts. “Giving buyers the opportunity to truly personalise their home purchases is certainly where the market is headed.”
For the sector as a whole, the green agenda will become ever more important, added Matthew Pratt, chief executive of housebuilder Redrow. “Sustainable homes that offer residents a more environmentally friendly way of living are at the top of our agenda in 2021 as we seek to further minimise our impact and encourage greater household savings for our buyers.
“This includes a move to electric boilers, and roll-out of more electric car-charging points. We’re also testing a variety of low carbon technologies to enable more sustainable solutions.”
Kellie added: “On the face of it, you would assume that 2021 will be a strong year for housebuilding, particularly with the Bank of England reporting that mortgage approvals hit their highest total since 2007 in October .
“Tied in with the stamp duty holiday, evidence suggests that the market is in a good position. Affordable housing feels particularly strong.”
The care sector
At various Place North West conferences this year, the word from residential specialists has been clear: virtually all towns and cities need to get on the front foot to create more places for an ageing population to live.
Kellie said he agreed with this sentiment. “This is a sector in which we are likely to see growth. Our sense is that there is a general under-provision of care and retirement homes and a desire and demand for more modern and high quality facilities. One potential area for growth is for extra care facilities as part of mixed-use developments in city centre schemes.
Growth in this residential sub-sector might need to be driven by Government policy, thought, Kellie added, because the market left alone is almost bound to seek the most lucrative option if it can.
“From a commercial perspective, a key challenge will be the opportunity-cost of providing an extra care scheme on a site, versus the value that could be derived by a market housing or BTR development,” he noted.