Homebuyers breathed a sigh of relief in January as the property market remained open during lockdown, with hundreds of thousands of transactions rushing to complete by 31 March. On this day, the Stamp Duty tax break, which cuts Stamp Duty to 0% on properties under £500,000, would have come to an end.
The rapid pace of market recovery in the second half of 2020 has shocked even the experts, with a Savills’ autumnal spotlight on the market referring to a ‘stronger than anticipated rebound.’ Furthermore, HMRC data revealed a massive 19.3% year-on-year increase in transactions in November last year, while mortgage approvals rose to a 13-year-high in October.
What lies ahead?
Although the media was awash with dire predictions of a house price crash early in the pandemic, nothing could be further from the truth. In fact, demand spiked when the property market reopened in May 2020, as buyers across the UK reassessed their current homes, locations and requirements.
This, combined with the incentive of thousands saved on Stamp Duty, were contributing factors of the increase in the average UK house price by 6% last year.
While the first quarter of the year is set to be hugely busy, with well over 600,000 sales in the pipeline (most of which will be aiming to complete by 31 March), ongoing economic uncertainty and the potential job losses that could follow the end of the furlough scheme in April, are likely to render this momentum unsustainable in the long run.
This pace is not believed to be sustainable throughout 2021, with some lenders predicting a flatter market, although modest growth is still predicted by some.
A ‘less straightforward’ year
The outlook for the 2021 residential property market is extremely uncertain. Rightmove have recorded their busiest ever start to a new year, with visits to their website up 30% compared to the same time last year.
Savills cautions that the outlook for 2021 will be dictated by the Stamp Duty holiday, the economic situation, and the rollout of the vaccine programme, with expectations that net price growth will be at or close to zero. Knight Frank is now predicting that UK prices will be flat over the course of the year, having previously predicted an increase of 1%.
Here whatever happens
As Knight Frank states, ‘short-term forecasting during an event as unprecedented as a global pandemic is not a straightforward exercise.’ But whatever happens this year, we’ll be on hand with expert guidance and advice, covering the latest property news and ensuring that you’re always up to date with what’s going on in the market.
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