Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Property market could cool rapidly in 2021 as SLDT rises

Zoopla

Forecasters, including Zoopla, Knight Frank and Chestertons, are suggesting average price rise of 1% to 1.5%

The property market could cool rapidly in 2021, according to forecasters, as the stamp duty holiday ends and unemployment rises.

Mortgage lender Halifax is expecting a fall in house prices of between 2% and 5% next year, after a 7.6% rise over the past 12 months fuelled partly by a post-lockdown surge in sales.

The Office for Budget Responsibility, the Treasury’s independent forecaster, is more pessimistic, predicting an 8% fall in prices in 2021.

The most bullish forecast is from property listings website Rightmove, which anticipates prices rising by 4% in 2021. But researchers at Savills are anticipating the market will be flat across all parts of the UK next year, before accelerating again in 2022.

Most other forecasters, including Zoopla, Knight Frank and Chestertons, are suggesting average prices will rise by 1% to 1.5%, signalling a major slowdown compared with 2020.

Pent-up demand after the first national lockdown in March, plus the temporary stamp duty holiday that began in June, spurred a market recovery that took many observers aback. By September, the market was steaming ahead at the fastest pace since 2016.

But the stamp duty land tax (SDLT) cuts – which saved buyers in England and Northern Ireland £15,000 on a £500,000 home – will expire on 31 March 2021. A month later, the government’s furlough scheme is set to end.

Rightmove says there is a logjam of 650,000 properties currently changing hands, which is expected to keep the market busy in the first quarter of next year.

Separate stamp duty breaks in Scotland and Wales were less generous, cutting the tax on sales of up to £250,000. But they are also set to finish at the end of March, and many expect the market to sag soon after the deadlines expire.

Once the SDLT holiday concludes at the end of March, we anticipate a slowdown in sales completions as the impetus to move among buyers motivated by stamp duty savings dissipates, said Richard Donnell of the listings website Zoopla. He anticipates transactions to run 20-30% below normal levels once the stamp duty bonus falls away, leaving prices at the end of the year just 1% higher than the start.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.