The past year will no doubt go down in history as one of the most turbulent and tumultuous, and unfortunately this shows no sign of letting up. Despite this uncertainty, there are some promising signs that 2021 could be a good time to buy property.
The UK housing market has seen many changes over the last 12 months, with the freeze on house moves in the first lockdown to the rapid rise in house prices towards the close of the year. Contending with COVID-19, Brexit and changes in the economy will continue to have an impact on the housing market, and subsequently house prices.
During the closing half of 2020, the UK property market experienced something of a boom, which shows no signs of slowing down. So, is now a good time to buy property in 2021?
What about house prices?
Property sales towards the end of 2020 were at record levels, contributed to by the temporary stamp duty holiday, which will expire on the 31st of March. However, something to bear in mind is the end of the furlough scheme in April which may cause an increase in unemployment.
Sales activity for housing is expected to slow down slightly in 2021, with the growth in house prices likely to be more subdued. Rightmove has predicted a 4% national average growth in house prices in 2021. This notion has been echoed by many surveyors.
The most reliable source of data for house prices is the Land Registry’s UK House Price Index, which is based on sold properties.
The Land Registry’s latest data from November 2020 shows the price of property in the UK increased by 1.2% month-on-month and 7.6% year-on-year to reach an average of £249,633.
However, latest figures from Halifax Managing Director Russell Galley show that British house prices fell last month for the first time since last May, which may be a sign of the uncertainty the pandemic has caused.
Some experts have also warned that housing market activity and prices may fluctuate after the stamp duty holiday ends, which may see a sales slump as many buyers may need to lower their offers to account for higher tax bills, which may add pressure to property prices.
What about the property market?
The property markets across England, Scotland, Wales and Northern Ireland are open, and estate agents are conducting virtual viewings where possible. Buyers and sellers are still allowed to move house, in-line with the government’s latest guidance.
Once you have conducted a virtual viewing, if you find a property you are serious about buying, you will be able to have an in-person viewing. Viewings must comply with social distancing measures and you must wear a face covering.
The rise in the UK property market in the last year can be attributed to the temporary cuts to stamp duty made by the government. The cuts vary between each country, but buyers could save up to £15,000 in tax if they move house before 31 March this year.
In the short-term this may cause a rise in house prices, especially on properties in sought-after areas.
The impact of COVID-19 and Brexit
The impact of Brexit on the UK housing market is unlikely to be felt in the short term but the longer-lasting effects are as yet still unknown.
Another uncertain aspect of the UK housing market is how COVID-19 will continue to impact the country and the economy. The introduction of the vaccine roll-out is likely to bring confidence to the housing market as we slowly return to ‘normal’
Despite the uncertainty of the year ahead, the UK property market will likely remain stable throughout 2021, and it could be a good time to apply for a mortgage or move home.
The Office for Budget Responsibility published its findings back in July which predicted a fall in house prices by 3.8%, you can read their full report here.
Changing priorities and mortgage availability
The pandemic has caused unprecedented demand for house moves, leading to a record year of property transactions. Successive lockdowns and uncertainty have led many homebuyers to reassess their priorities, such as the requirement for more space and better internet connection.
The base interest rate is likely to remain the same in the short term, which is expected to keep mortgage rates down. If this trend continues throughout 2021 it will remain an attractive time to purchase property.
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