Nottingham Property Market 2021: Another Boom Year?

Nottingham Property Market 2021: Another Boom Year?

As Nottingham’s leading home and landlord insurance brokers, we’ve always taken a keen interest in the local property market. Over the last 18 months, we have seen an unprecedented level of activity in all sectors. As we approach the end of 2021, we thought we’d look at how the property market is faring and try and determine what the future holds.

2021: Another Boom Year For Nottingham?

The government introduced the stamp duty holiday in July 2020 in a bid to stimulate the property market following the first Covid lockdown, and it certainly did that. As we mentioned in our Nottingham rental property blog, the city saw property sale prices rise by 7.55% according to Zoopla, leaving them a staggering 25% up on five years ago. And the boom seems to be continuing. Last week the Nottingham Post reported that Retford was named a top house price hotspot with a 19% increase in the average asking price.

Local estate agents have also reported that the housing market is moving at an unparallel rate. Where once buyers would hold out and negotiate on asking prices, this year they say buyers have needed to move quickly, and that they are seeing buyers offer full asking price and over to secure the property they want. In the case of landlords it seems to be even more extreme. We’ve heard of landlords putting in offers on ten properties in the hope of securing one, such is the level of demand that’s out there.

The fact that the surrounding areas of Nottingham have seen higher rises in price is indicative of buyers’ desire for more space, and a reduction in the need to be located in city centres as hybrid working becomes the norm.

While the stamp duty holiday ended on 30th June 2021, buyers had until the 30th of September to complete purchases and avoid higher stamp duty rates. The ONS’s UK monthly property transaction figures have a month or so lag, so we won’t know for sure if the figures have slowed until November/December time, but what we are hearing is that prices are remaining high. We’ve certainly seen no drop in demand for property insurance quotes – especially for landlord insurance quotes.

Slowing But Still Growing

The Nationwide has reported that house price growth slowed in September with the average price of a home increasing by just 0.1%, making house prices on average 13% higher than early 2020. Some predict this slowdown may be further impacted by price rises elsewhere. Increasing costs for fuel and food mean that households have less disposable income and may therefore resist moving if house prices remain high. That doesn’t necessarily mean house prices are set to fall either, though.

Low interest rates make borrowing and mortgages more affordable, and while there’s talk the Bank of England may look at raising the base rate to curb inflation, rates are currently still at an historic low.

Another key factor is the lack of supply. According to the ONS, monthly construction output fell 0.2% in August 2021 and is 1.5% (£214 million) below February 2020’s level, with new work 3.7% below that of February 2020. Product shortages caused by supply chain issues and subsequent price rises are believed to be the main reasons for the decline. So, with falling supply and rising construction costs it’s unlikely prices will fall any time soon.

Rent Rather Than Buy?

So, is renting the way to go? During the summer, one leading estate agent reported that, for the first time since December 2014, renters were paying less per month than those with a mortgage. On average, tenants in the UK were spending £1,054 on rent each month, while homeowners with 90% mortgages were paying £1,125.

This said the Royal Institution of Chartered Surveyors have this month predicted that rents may rise due to the demand and supply imbalance in the rental market. The solution here maybe in repurposing commercial properties such as the Old Post Office building in Nottingham along with the council’s plans to enforce the sale of long-term empty houses and vacant land under the Law of Property Act 1925.

Aside from affordability, renting also offers tenants flexibility in terms of where they live and of course they are not responsible for the upkeep of their property, which, with rising construction costs, is one less financial worry.

Rising Costs (And Risks) In Looking After Your Property

The BCIS’ Private Housing Construction Price Index (PHCPI) rose by 3.4% in the second quarter of 2021 and by 7.6% between the second quarters of 2020 and 2021. The rising costs of materials such as steel and timber are one factor, but also labour shortages and subsequent wage rises. These rising costs are likely to impact on any conversion or refurbishment projects homeowners or landlords are looking to undertake, as well as those for new builds.

Property owners in the UK also face a significant, if hidden, problem: property underinsurance. At the time of writing, a massive 82% of UK propertes are underinsured

A major cause of this problem is the reinstatement value of a property being too low. The reinstatement value is the amount it would cost to rebuild your property – including demolition, site clearance, architect’s and surveyor’s fees, as well as construction costs – and if it’s too low you could be left with a huge bill in the event of a claim.

Do you know how much it would cost to rebuild your home or rental property in event of a catastrophe? Many people don’t, or have out of date assesments.

Whilst it’s easy to see how many homeowners and landlords could fall into this underinsurance trap, particularly this year, at Coversure Nottingham we have a simple 4-step plan to help you avoid it.

Property Underinsurance - Coversure's 4-Step Guide

Like Some Property Insurance Help?

2021 has been an eventful year in more ways than one, and the Nottingham property market has clearly reflected that. While we may see a foot on the brakes in 2022 following the end of the stamp duty holiday, most experts expect any deceleration to be gradual. Here prices may well continue to rise. The desperate shortage of stock and ever-increasing demand has made the city a property hot spot, one that shows no signs of burning out.

If you’d like any advice on protecting your property, then please call the Coversure Nottingham team on (0115) 837 0984 or email the Coversure Nottingham team.

Sources:

UK house price growth slows as end to stamp duty holiday looms | Housing market | The Guardian

Construction output in Great Britain – Office for National Statistics

Renting vs buying: should you buy now or wait? – Which? News
Data insights 2019 report by rebuildcostassessment.com

Archive by Date


Your Local Office is:

NOTTINGHAM

Call us: 0115 837 0984

Address:
Lady Bay House, Meadow Grove, Meadow Lane,
Nottingham, NG2 3HF

Contact us

PLEASE NOTE: Coversure will save details on this computer regarding your postcode and the location of your nearest Coversure office. This will help us display relevant information to you on future visits. For more information please review our cookie and privacy policies.