Published: 02/02/2021There are signs that last year’s mini-boom in the UK housing market may be over, as Nationwide Building Society announced that prices fell by 0.3% in January and annual growth slowed to 6.4% from 7.3% in December. Mortgage approvals also appear to be slowing, down 1.8% in December according to the Bank of England, but still at the second highest level since August 2007.
Momentum grew in the property market during 2020 as people reassessed their homes in the light of the pandemic, and property sales were fuelled by the stamp duty holiday announced on 8th July. With this tax break due to end on 31st March, it is increasingly unlikely that it will be extended, and buyers who haven’t yet agreed deals are realising that they are running out of time to meet the deadline.
So, whilst the first quarter of 2021 will be busy, most analysts expect this to be followed by a lull in activity and some price readjustment during the second quarter. Many have already made the decision to move and will still do so even if they missed out on the tax break. No doubt there will be some pressure on prices as buyers seek to recoup some of this discount.
How this will impact on prices for the year as a whole is unclear, as illustrated by the lack of a consensus in forecasts, which range from an increase of 4% (Rightmove) to a fall of 2%-5% (Halifax), or 8% (Office for Budget Responsibility).