Although Christmas was cancelled for many as the majority of the UK was plunged into Tier 4, it was a great end to 2020 property wise.
House prices had risen 6% on average compared to 2019 according to the UK's biggest mortgage lender: Halifax. The average UK house was worth £14,295 more in December 2020 than in December 2019. This could be due to the government's announcement earlier in the year of a stamp duty holiday for houses up to £500k, which will last until March 2021. Whilst this seems promising, let's take a look at what else 2021 has to offer the property market.
5 Things You Need to Know About House Prices
1. Although the above figures look promising, there was only a 0.2% rise in prices in December compared to November. It was actually the lowest rate of growth between June and December, where there were continuous gains.
2. We have to remember that 2020 was a strange year in all aspects, so these trends can mainly be put down to the announcement of the stamp duty holiday, coupled with the National Lockdown that had many re-evaluating whether they were happy where they were.
3. This trend is due to end when the Stamp Duty holiday finishes in the Spring, with the help-to-buy scheme only being available to new homeowners from April 2021.
4. In general, house prices are due to fall by up to 5% in 2021, so many may rethink selling their homes. The announcement of the third National Lockdown and unemployment expected to rise in the first quarter reinforces the prediction that prices are likely to fall.
5. A lot of experts are saying that the housing market could pick up again in late 2021, but only if the UK economy becomes more stable and the job market picks up again.
4 Thing You Need to Know About Mortgages
1. We ended 2020 with mortgage approvals on a 13-year high, with approvals topping 100,000 in November, which was the highest on record since 2007.
2. The outlook for mortgages continues to look promising for the first quarter, despite the expectation that unemployment will rise. However, experts are warning buyers to be careful as there will be a potential dip in Spring due to the end of the Stamp Duty holiday amen furlough coming to an end. Not to mention the end of the third National Lockdown (if we are lucky!)
3. The third National Lockdown and restrictions in most areas is making it harder for things to move along efficiently. So be prepared for mortgage approvals to take longer than usual at the moment.
4. On a positive note, the lockdowns have meant that some are able to save more and spend less. Many are unwilling to make unnecessary purchases, which has contributed to a lot of first time buyers being able to produce a sizeable deposit to secure their mortgage.
Overall, 2021 will be another year of ups and downs. The market will mostly stay strong for the immediate future, but we are likely to see downward pressure on values once the Stamp Duty holiday ends. However, many experts remain positive that the market will pick back up again towards the end of the year. On top of this, low borrowing costs should also help those looking to buy, with the Bank of England unlikely to lift interest rates from 0.1% during 2021 and quite possibly a long time after that.
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Normette Homes specialises in property investment and tenant sourcing.