House Prices May Fall By 5 Per Cent In 2021
Industry experts have warned that house prices could fall in 2021 by between two to five per cent. It is believed it could be due to rising unemployment caused by the COVID-19 pandemic and the end of the current stamp duty holiday.
The UK experienced an unexpected ‘mini-boom’ in 2020, however, the boom is not expected to continue beyond 2021 as Halifax, Britain’s biggest mortgage lender, has predicted that after an initial surge to beat the stamp duty holiday deadline, house prices will fall by up to five per cent, according to the Guardian.
Halifax said that if prices do fall, it may only partially reverse the increase of nearly £18,000 that has been added to the average UK house price over the past year.
The mortgage provider stated that the average UK house price is now £253,243, compared with £235,353 a year ago, which equates to an increase of £17,890. Should prices fall by five per cent in 2021, it would mean an average of £12,662 being wiped off the value of properties.
Russell Galley, managing director, Halifax, said: “While the economy should begin to recover in 2021, helped by the rollout of Covid vaccines, the jobs market will inevitably adjust to the changes in demand that are occurring, and unemployment is expected to rise.
“With the stamp duty holiday also due to expire in March – and lower levels of demand – housing market activity is likely to slow. Taking all of this into account, the post-summer surge in house prices is unlikely to be sustained.”
However, predictions for the market in 2021 from estate agents are varied. Savills said it expects UK house prices to show a 0 per cent change in 2021, but in 2022 it has pencilled in a 4 per cent increase, with a 6.5 per cent uplift in 2023.
Property website Zoopla said it expects positive growth for house prices in 2021, with stronger increases in the first half of the year, and more modest increases by the end of 2021, ending with prices in December 2021 around 1 per cent higher than they were in December 2020.
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