2021 Predictions for the U.K. Housing Market
No industry is immune from the disruption wrought by the covid-19 pandemic, as it pushes us from lockdown to ill-fated tier system and back to lockdown and more lockdown. Even with all the changes to process, such as online viewings and no-contact removals jobs, the housing market – like anything else that forms part of life in the UK – has been profoundly shaken up by the way the world has abruptly changed over the last 12 months. But enough of the past – what exactly lies ahead for the rest of 2021? Here’s our Master Removers report on what we expect of the UK housing market over the next few months.
What are the Main Factors Currently Influencing Change in the Market?
Without a doubt, it’s Brexit and coronavirus. These two forces have coincided (it might have been a better outcome had we been subjected to them one at a time, rather than simultaneously), sending shockwaves through every industry, from entertainment to fishing, and shutting some of them down entirely. Still, some of the government’s measures have had an off-setting effect. In July 2020, stamp duty was temporarily suspended, helping the market remain buoyant. Of course, all good things come to an end and, unless there’s a change of plan, the stamp duty holiday will be over at the end of March 2021. People buying before that date could save well as much as £15,000 in tax. The uptick created by this suspension has been significant, with HMRC figures indicating that December 2020 sales were up 32 per cent on the previous year. All of the companies within MRG have experience of this, to quote one, Peter Donaldson from Camp Hopson Removals in Newbury “We are over twice as busy as normal for this time of year and and the extra business is almost completely down to be people trying to move before the end of the stamp duty holiday”
Meanwhile, there’s conjecture about the ongoing effects of Brexit on the housing market. We can see that there was a significant fall in property prices towards the end of 2018, some of which was attributed to Brexit worries. However, when we look at the market in terms of the number of transactions per month, it remains in a healthy state. Nevertheless, we still don’t know the full extent of the impact of Brexit on people’s everyday lives, and there remains some call for an extension on the stamp duty holiday so that the market remains supported through the uncertainty. Without that, it’s almost certain there’ll be a slump in movement in April and May. Price inflation, however, is not expected – prices are anticipated to be either static or lower, with rises only occurring in specific regions but not at a national level.
What are the Predictions for London?
Things in the capital are as clouded by doubt as everywhere else. There are two principal contributory factors likely to influence how things pan out in London this year; the whole country’s recovery from the pandemic and the unemployment rate. While it’s thought that overseas investment is likely to remain healthy, experts are predicting a drop in house prices by the time we reach autumn or winter. Then there’s the added effect of the widely-trumpeted London exodus; an averse reaction that many home-owners (and renters) experienced when they went through lockdown in cramped flats and apartments. While this trend is expected to stay active through the first half of 2021, it’s thought it will have calmed down by the second half. As for an actual figure on the lowering of house prices in London? Chestertons estate agents have given it an estimate of 2 per cent. However, this is the figure for Greater London – for central London, the picture is more optimistic; instead of a decrease, there could be a 1.5 per cent increase.
Will the End of the Furlough Scheme Affect House Prices?
That’s certainly one of the predictions. When the furlough scheme ends, there could well be a sudden rise in unemployment and consequent economic decline. People no longer able to keep up with mortgage repayments are compelled to sell up quickly and a spate of these sales-in-haste usually pushes prices down. That being said, the government could take action to try to mitigate some of this damage.
What does Master Removers say about the outlook?
Charles Rickards, Director of the Master Removers Group, comments:
“We expect the housing market to remain brisk until the end of March when the stamp duty holiday ends. Looking beyond this date, outcomes will depend on the budget in early March and how the Chancellor treats stamp duty going forward. A return to a more normal economic outlook becomes more likely as the vaccine rollout and its benefits gather momentum. However the end of the furlough scheme will, for some, be a moment of truth; not just for individuals, but for businesses as well. There is likely to be a short term negative effect on house prices and banks’ enthusiasm to lend which is likely dampen activity for the rest of 2021.”