Predictions of a property market ‘crash’ in the UK due to coronavirus and, before that, Brexit have so far not come true.
If there’s one thing the property market is, it’s resilient against economic forces.
And despite facing some major tests over the past few years, not least in 2020 due to the Covid-19 pandemic, the UK property market has remained robust.
But what will happen to the property market in 2021 and beyond and is it a good time to buy a property?
Property prices in 2020
Despite the pandemic and the enforced spring shutdown, the UK property market has performed well since restrictions were lifted at the end of May.
The market’s strong ‘bounce back’ was supported by cuts to stamp duty in England and Wales, while pent-up demand was strong from buyers and sellers unable to move during the spring lockdown.
Nationally, Rightmove is predicting 7% growth in property prices in the UK for 2020.
Zoopla, meanwhile, predicts 2020 price growth will top out at 4%.
Both of those figures are considerably higher than the 1.4% growth experienced in 2019.
Regionally, there are variations but in Whitegates’ core areas of the West and East Midlands, Yorkshire & The Humber, Wales and the North West, price growth matches or exceeds the national picture, according to Rightmove’s prediction.
Yorkshire & The Humber
Annual price growth (to November 2020): 8.6%
2019 annual price growth: 1.8%
Annual price growth (to November 2020): 10.3%
2019 annual price growth: 1.5%
Annual price growth (to November 2020): 7.1%
2019 annual price growth: 1.9%
Annual price growth (to November 2020): 7.3%
2019 annual price growth: 1.7%
Annual price growth (to November 2020): 9.3%
2019 annual price growth: 3.2%
Property market predictions for 2021
How well property prices perform as we move into 2021 could hinge on a number of factors, including potential coronavirus vaccines and the ongoing problems caused by the pandemic.
The UK is also set to completely sever ties with the EU on December 31 and the market could be affected by any potential Brexit deal, or no deal, scenario.
Most commentators are coming down on the cautious side when it comes to the property market in 2021, with more improved growth forecast from 2022.
PriceWaterhouseCoopers (PwC) has forecast a 7% drop in a ‘worst case’ scenario if there is a further serious coronavirus outbreak. However, the firm adds that if the UK is able to contain the spread of Covid-19, a 1% increase in property prices is more likely. Over a five-year period, it suggests house prices will grow 4% by 2025.
The Office for Budget Responsibility’s ‘upside scenario’ predicts prices will remain stable for the remainder of 2020 and rise by 4% in 2021, followed by ‘strong growth’ in 2022.
Interest rates are set to remain at record lows and with the remainder of the stamp duty holiday until March 2021, buyer demand should remain strong through the first quarter of 2021.
Stamp duty cuts and Help to Buy
The property market’s buoyancy since the spring Covid-19 lockdown was lifted at the end of May has, in part, been thanks to those cuts in stamp duty.
With the first £500,000 of a property’s purchase price now free of stamp duty, buyers have been frantically seeking out suitable properties to beat the deadline of March 31, 2021, when stamp duty is expected to revert back to its previous rates.
However, the Chancellor Rishi Sunak hasn’t yet ruled out extending the stamp duty ‘holiday’ beyond that date.
The Help to Buy scheme has also been extended and will still be available to first-time buyers from April 2021.
If you’re thinking of buying your first home in 2021, take a look at our first-time buyer hotspots.