A 4 percent rise is the most ambitious prediction for 2021 as the stamp duty holiday and the end of the Covid Furlough program
In the U.K. According to estimates, the housing market could cool rapidly in 2021 as the stamp duty holiday ends and unemployment increases.
According to building society Nationally, house prices soared to a six-year peak at the end of 2020, up 7.3 percent a year, but the mortgage lender expects the market to “cool sharply” in the coming months.
Lender Halifax expects home prices to fall between 2 percent and 5 percent next year, while the independent Treasury forecaster, the Office for Budget Accountability, is more cautious, forecasting an 8 percent decrease in prices in 2021.
The most ambitious prediction comes from the Rightmove property exchange, which expects prices in 2021 to increase by 4%.
Market analysts at Savills, however, predict that the market will stagnate next year in all parts of the UK until picking up in 2022.
Compared to 2020, most other forecasters, including Zoopla, Knight Frank and Chestertons, expect average prices to increase by 1% to 1.5%, a slowdown.
After the first national shutdown in March, pent-up demand, along with the temporary stamp duty holiday that started in June, resulted in a market rebound that shocked many observers.
The market surged ahead in September, at its fastest pace since 2016.
Prices in December were up a stunning 5.3 percent from March, when the Covid 19 pandemic struck the UK, according to Nationwide.
Robert Gardner, chief economist of Nationally, said, “At the beginning of the pandemic, the resilience we have seen in recent quarters seemed unlikely.”
In fact, during the initial freeze, housing market activity came to an almost complete halt as the overall economy contracted by an astounding 26 percent.
The Stamp Duty Land Tax (SDLT) cut, however, which saves purchasers £ 15,000 on a home worth £ 500,000 in England and Northern Ireland, expires on March 31, 2021.
A month later, the tax relief from the government ended.
Rightmove claims there is a backlog of 650,000 properties that are changing hands, which in the first quarter of next year should keep the market busy.
In Scotland and Wales, separate stamp duty breaks were less generous, eliminating sales taxes by up to £250,000. They, too, will expire at the end of March, and soon afterwards, many expect the economy to soften.
“Once the SDLT vacations expire at the end of March, we expect sales transactions to slow as the impetus to move among buyers motivated by stamp duty savings wanes,” said Richard Donnell of Zoopla’s listing website. When the stamp duty incentive is withdrawn, he expects sales to be 20-30 percent below regular levels, meaning rates at the end of the year will be just 1 percent higher than at the start.
Knight Frank, a real estate company, has a similar view and expects inflation in house prices to remain reasonably subdued over the next few years, expecting rises of 1% in 2021 and 3% in 2022.
With just a 1 percent rise in Greater London in 2022, Savills expects price growth to stall next year. Lucian Cook, head of residential research at Savills, said, “We expect the economic impact of the pandemic to weigh more heavily on the housing market next year,”
In the northwest of England, he expects the recovery to be the fastest. In 2022 and 8% the following year, price growth could accelerate to 6 percent.
The five-year projection by Savills shows the North West at the top of the table, with a possible 27.3 percent increase, and London at the bottom, with a 12.7 percent rise.
The form of property pursued by house hunters has been modified by the pandemic. In recent quarters, Nationally said demand for less densely populated areas has increased and detached properties have seen greater price increases, while apartments have declined.
The outer southeast area, which includes Brighton, Southampton and Oxford, saw prices rise 8 percent in 2020, following a 1 percent decline in 2019, with many Londoners moving away from the capital.
Chestertons predicts prices will struggle next year in the capital. Nick Barnes, head of research at the London-based agency, said, “We expect ha ha ha ha ha if there are no other major systemic shocks.”