HOUSE prices are set to fall by nearly 14% next year as the property market feels the impact of coronavirus and the stamp duty holiday come to an end.
Leading economists predict house prices will start to fall “significantly” by the end of the year and in the first half of 2021.
This will result in house prices 13.8% lower in 2021 compared to 2020, according to the Centre for Economics and Business Research (CEBR).
The CEBR think tank initially suggested house prices could fall 13% this year. That was before the stamp duty holiday and other coronavirus support was announced by the government.
The CEBR now estimates house prices will fall 1.2% this year.
House prices had their biggest monthly rise in 16 years in August in what’s been described as a “mini-boom” following a bounce back of 1.6% in July.
House prices had fallen in March, April and May, and stayed the same in June.
People have rushed back to buying homes since the easing of lockdown and to take advantage of the stamp duty holiday announced by chancellor Rishi Sunak back in July.
Buyers will pay no stamp duty on homes under £500,000 instead of £125,000 until March 2021.
The furlough scheme and a ban on repossessions have also helped, but the CEBR predicts the boost from this support will only be temporary.
The CEBR said: “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% lower in 2021 than in 2020.”
The furlough scheme will come and end in October and repossessions can also restart.
The CEBR also noted that “pent-up demand from the period of lockdown will eventually work its way out of the system in the coming weeks”.
And it said in it’s latest report that: “housing activity in the summer months is likely to have been skewed towards higher value properties distorting some of the unofficial data”.
Data from mortgage lenders offers some indication of what is happening to house prices but official data come from the government and is based on actual transactions.
Forecasts for future years suggest there may be some recovery.
House prices are expected to increase 6.9% in 2022 and then 5.5% in 2023, the CEBR predicts.
What’s next for house prices after hitting 16-year high? Here’s what experts told The Sun.
The average deposit for a first-time buyer has risen by a quarter to almost £50,000 – fuelling fears that some struggling families will never be able to buy a home of their own.
First-time buyers can often struggle to get onto the property ladder, but they can take advantage of one of the government schemes aimed at home ownership.