Property experts hope that a stamp duty holiday and relaxed lockdown restrictions would shield UK house prices from a dramatic drop due to coronavirus this year.
At the height of the lockdown, experts predicted that UK house prices could fall by as much as 10% this year due to the coronavirus impact.
However, by raising the stamp duty limit from £125,000 to £500,000 by the end of March 2021, Chancellor Rishi Sunak sought to breathe new life into the property market.
According to the latest research which was conducted by Rightmove, enquiries to estate agents for houses that agents priced between £400,000 and £500,000 has risen by 49% since the announcement of the stamp duty holiday.
Rightmove had warned only in April that there was “not a working housing market” after the buyers did not visit houses during the lockdown.
And the drastic economic impact also made people warier of making major purchases.
The coronavirus blow came just as the UK house prices started to rebound from the chaos that was caused by the confirmation that the UK was 100% leaving the EU at the end of 2019. And property prices have registered an annual decline for the first time since June 2012. Property prices had slipped 0.1 percent year on year after a 1.8 percent rise in the month of May.
Global statistics also revealed a decline of 1.4 per cent per month, with an average price of £ 216,406 per month. The data released by Halifax showed that UK house prices had dropped for the fourth month in a row in June.
RICS: Fewer Surveyors Expect The Drop
A June survey conducted by the Royal Institution of Chartered Surveyors (RICS) found a net balance of minus 12% of respondents predicted to decline over the next three months. This was compared to minus 43% when respondents were questioned in May.
The survey also found that buyers had begun to return to the market in June.
The net balance of 61 percent of RICS members registered an improvement in new purchaser property searches in the month of June following a result of minus 94 percent in the previous month.
Halifax: Further falls ‘likely’
UK Bank Halifax supported a government stamp duty cut.
However, most recently, it has announced that prices have fallen at their sharpest quarterly rate since 2009. And the value of the property market declined for the first time since 2010 for four consecutive months.
The Bank expects the UK house price to fall further in the second half of the year.
“It’s hard to look beyond adverse threats to prices over the medium term,” said IHS Markit Economics Director Paul Smith.
“On balance, more price increases appear more likely to occur in the second half of the year.”
EY: UK house prices face -3% fall
The EY Item Club predicts that UK house prices will fall by about 3% by the end of the year. This is an improvement on its previous prediction of a five per cent decline.
Chief Economist Howard Archer said that Sunak’s decision to raise the stamp duty threshold would provide some “near-term support for housing market activity.”
“However, the EY ITEM Club expects that the housing market will be constrained as a result of challenging consumer fundamentals,” he said.
The decline in UK house prices could have been more dramatic in the final months of the year, Archer predicts. That is when the UK was able to approach the cliff-edge end of its Brexit negotiations.
“Unemployment is likely to rise,” Archer said. “This will not only adversely affect the fundamentals of home buyers, but will also lead to caution when people think about buying a house.”
Savills: London could fall -2%
Estate Agent Savills predicts that prime central London house prices will fall by 2% this year before they return to growth in 2021.
“It is clear that many international buyers have yet to return to the market,” said Lucian Cook, head of residential research at Savills.
“The pandemic has blighted the wealth of those who buy in these rarified markets and, given the effect on the global economy, has undermined the prospects for the generation of global wealth,” he added.
“And, while we expect London to continue to draw safe-haven investment as the market completely reopens, the pace of price growth will be slower than in previous upturns.”
Santander: House prices to fall -6%
The base case scenario of Santander expects a six per cent decline in UK house prices this year.
The base case scenario will be a “short sharp recession” in the first half of the year. Then the Bank expects a sluggish recovery for the remainder of the year and into 2021.
The upside scenario, which would include a more robust Brexit trade agreement being signed, an extension of the negotiating period, or a Covid-19 vaccine, would decrease house prices by 0.1%.
Knight Frank: Prices to slump -7%
Knight Frank estimates that UK house prices will decline by 7% this year. They’re going to rebound to rise by 3% next year.
Central London’s prime property prices are projected to fall by 5%. But in 2021, they could bounce back with a rise of 8 per cent.
House prices in prime locations outside London are also projected to decline by 5% in 2020. A more moderate 2% growth rate is expected for 2021, the estate agent said.
Barclays: House prices to rise 0.06%
Barclay’s basic scenario is house price growth of 0.6 per cent this year, growing to 2 per cent in 2020.
The worst predicted point of the Bank is a 1.5 per cent decline in house prices, the Bank said in its half-year financial results.
Though these predictions have been made, the UK property market is yet to see any major slump, some parts of the UK have been more negatively affected than others and with the changed to stamp duty and investors keen to buy up properties, the housing market has remained relatively stable.
If, however, the predictions are correct, now would be a good time to list your property on the market as they are the highest they have been in some years and if the predicted slump in the market is just around the corner, you’re not as likely to get as much for your property as you’d have anticipated, especially after 31st December, though who can say if this is true or not.
The British economy has remained relatively strong in the face of many challenges, the currency remains strong, and even a weaker currency would spur overseas investors to buy a property. There is also set to be an increase in the property rental market meaning that more landlords may increase their property portfolios in response to the demand.
It’s still extremely unpredictable!
We hope you found this article helpful, propertyhelp.uk is keeping a close eye on things and will post regular informative articles about the ever-changing property markets that remain volatile yet somewhat stable for the months to come and the months that follow the UK’s official date for the end of EU negotiations which takes place on 31st December 2020.
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