UK house prices recently saw their biggest monthly rise in 16 years, but analysts predict prices will drop next year.
Inews reports that the coronavirus pandemic has overturned many aspects of our lives, but one area currently showing resilience is house prices.
The property market collapsed for more than two months during the peak of lockdown, with in-person viewings banned to help slow the spread of the virus. It also had a knock-on impact on people in the process of buying a property, as surveyors and removal firms also couldn’t enter.
Naturally, house prices fell across the month of May – down 1.7 per cent, the biggest monthly fall in 11 years, according to the lender
Nationwide. But after the property market lockdown lifted in May, estate agents reported a flurry of activity due to pent-up demand.
Meanwhile in early July the Government announced a stamp duty holiday for buyers in England and Wales, suspending the tax on the first £500,000 of a property purchase until 31 March 2021 (landlords still have to pay the 3 per cent surcharge). This also gave the housing market an extra boost, as homeowners rushed to upgrade to a bigger property and potentially save £15,000 in tax.
A further update from Nationwide earlier this month indicated UK house prices saw their biggest monthly rise in 16 years last month, up 2 per cent at £224,123.
Prices expected to drop
So is it safe to say the housing market has recovered? Not quite. Some analysts think prices will drop significantly towards the end of the year as the furlough scheme and ban on mortgage possessions comes to an end on 31 October.
Economics consultancy the Centre for Economics and Business Research (CEBR) predicts house prices will fall 14 per cent next year as more people are forced to sell up, thereby increasing supply.
Economics consultancy the Centre for Economics and Business Research (CEBR) predicts house prices will fall 14 per cent next year as more people are forced to sell up, thereby increasing supply.
The consultancy concludes: “Our analysis suggests that prices will start to fall significantly towards the end of the year and the first half of 2021 (though there might be a short spike as the stamp duty reduction comes to an end), with average house prices forecast to be 13.8 per cent lower in 2021 than in 2020.”
Nevertheless, many first-time buyers remain cautiously optimistic and certainly the property market seems to be doing buoyant trade at the moment. If buyers plan on staying in the property for at least a few years, and are confident they can keep up mortgage repayments, then short-term knocks to the housing market shouldn’t cause too much concern.
(Story source: Inews)
