The end of 2020 saw house prices at a record high, helped by the chancellor’s Stamp Duty holiday, but what is likely to happen in 2021 as financial disruption continues?
The property market slumped during the first lockdown of 2020, with prices down 0.5 per cent halfway through the year. However, following relaxing of restrictions and fuelled by the Stamp Duty break prices surged, as those who had to put a move on hold went ahead, employees working from home looked for places with more space and people who had been considering a new home decided to take advantage of the chancellor’s offer. Low mortgage rates also helped encourage people to take the plunge.
HM Revenue & Customs reported the busiest October for the past five years in respect of property purchases. Although there was a slight slowing in November and December, average house prices finished the year over £13,000 higher than in 2019.
Stamp Duty and Help to Buy
The Stamp Duty holiday is currently due to continue until the end of March 2021, so house buying activity is likely to be vigorous until that point as buyers look to save thousands on the cost of a move.
It is possible that sales will come to a sudden halt, a so-called cliff edge, from April however. In addition to the end of the Stamp Duty break, the government’s Help to Buy scheme will only be available to first time buyers, while overseas buyers will be charged an extra 2 per cent in Stamp Duty.
The furlough scheme
The government’s Coronavirus Job Retention Scheme is also currently due to finish at the end of April and some job losses are anticipated.
Lucian Cook, residential research director at estate agent Savills anticipates “a year of three parts”, starting with a rush to meet the Stamp duty deadline.
“Thereafter you will undoubtedly see a lull in activity. You may see some of the gains in house prices unwind.” He believes that the number of transactions as well as house prices will increase later in the year however, as employment levels rise and the population at large is vaccinated.
Areas of growth for 2021
The pandemic has motivated people to consider moving, with many hoping to continue working at home part of the time even following the end of the crisis.
This means that many will be happy to move farther from their workplaces in exchange for more space and a bigger garden.
However, city properties are also likely to be popular, with prime London housing still faring well during the 2020 lockdown.
House building is also set to resume at pace, as the government reduces planning restrictions to enable the construction industry to put up new housing more easily.
Tim Bannister, director of property data at online estate agent Rightmove says: “2021 has a lot of variables, and so is not an easy one to call, but with Rightmove’s unique leading indicators of buyer and seller behaviour we are confident that the housing market will continue to outperform general expectations next year as it did this.”
If are thinking about buying or selling a property and you would like to speak to one of our expert lawyers, ring us on 0333 305 5189 or email us at enquiries@lpropertylawyers.co.uk.
