According to the reallymoving House Price Forecast, the start of 2021 will herald a gradual decrease in house prices after 2020’s record highs throughout the year, but particularly in December.
House prices for November rose by more than was anticipated, with an average price of £347,035; this is an increase of 17.2% compared to November of 2019. Because of this, the forecast predicts that December will also have a bigger growth than previously predicted, with an average price of £352,239. This would mean an enormous increase of 20.7% compared to 2019.
Moving into 2021, prices will drop by 1.2% in January, and will then drop by a further 2.5% into February, with a predicted average price of £339,306 in Feb. This new year drop is likely due to the end of the Stamp Duty holiday in April, with no announcement from the government yet on whether they plan on extending it. This means there is less demand to buy a home as you are unlikely to complete before the holiday ends.
However, though the numbers are dropping, house prices are still at a record high, with the difference between January 2020 and 2021 being an increase of 18.4%, and February’s difference being up 16%. In fact, the predicted average house price in February is only £7,729 below November’s average. This is still positive growth for the housing market.
Regionally, London, Wales and the North East of England are the only parts of the UK that will see a house price increase in February. The North East will see the highest of these, with an increase of 5.4% from November to February. The area that will see the biggest drop in house prices by February is Northern Ireland, with a drop of 14.7%.
The House Price Forecast has also highlighted the fact that, compared to July-December of 2019, the number of First Time Buyers in the market has fallen by 12%. This is likely due to the fact that the Stamp Duty holiday had little impact on them, and 2020 presented many new problems with securing loans and mortgages, as well as the large increase in house prices.
You can see more information in our November 2020 Forecast.