House prices have increased by 13%, but when will they begin to fall?
HOUSE PRICES are currently a whopping 13% higher than they were at the onset of the coronavirus outbreak, but while high property prices are a seller’s dream, purchasers aren’t so enthusiastic. When will housing prices start to fall?
According to Nationwide’s chief economist, house prices have grown 13% following exceptional overall growth over the last 18 months. The average property price increased by nearly £5,000 in August, confounding predictions that the market would cool after the stamp duty holiday was phased out earlier this summer.
“Underlying demand is likely to decline at the turn of the year if unemployment rises, as most analysts expect as government support schemes wind down,” said Robert Gardner of Nationwide.
“However, even this is far from certain. To now, the labor market has proven to be remarkably durable, and even if it does deteriorate, alterations in housing choices as a result of the pandemic have the potential to sustain activity for some time.”
The phasing down of the stamp duty holiday appeared to have cooled the market significantly at the time, but experts were caught off guard.
“The largest monthly gain in 15 years tells you everything you need to know about the current health of the UK property market, and it’s now abundantly clear that the tapered end of the stamp duty holiday isn’t going to be the significant event that many predicted in terms of its impact on property values,” said James Forrester, Managing Director of StripeHomes.
“While it did spark a resurgence in homebuyer demand, this greater intent to purchase has been driven by a want to own our own houses, not a desire to save a few thousand pounds, and this desire will burn long after the final deadline has passed at the end of September.”
The resolution of the stamp duty vacation has been over-credited with the property market boom, according to the Resolution Foundation, with a range of other factors implicated in the housing price increase.
It added that, in addition to a longing for the countryside and family houses, strengthened savings built during the shutdown and low mortgage rates were driving up prices.
“The issue,” stated Krishan Shah of the Resolution Foundation. “Brinkwire Summary News.”