Residential property prices are set to drop by 6.2% in the first quarter of 2021, according to reallymoving House Price Forecast, which has historically closely tracked the Land Registry’s Price Paid data.
The figures, providing one of the earliest snapshots of the housing market outlook, show that reallymoving expect to see home prices fall by 1.2% in January, 2.5% in February and by 2.6% in March.
Consequently, based on Reallymoving’s analysis of 24,000 conveyancing quote forms completed in the last quarter of 2020, average property prices look set to fall from £352,106 in December 2020 to £330,295 by March.
Once the stamp duty holiday has ended pressure on conveyancers, surveyors and removals firms will ease, alleviating congestion in the system and bringing more reliability to the home move process, according to Rob Houghton, CEO of reallymoving.
He commented: “Considering the wider economic context of the post-lockdown property market boom, it was never a matter of if it would end, but when. In the second half of 2020 buyers faced stiff competition for homes, forcing them to pay more and in many cases wiping out the stamp duty saving, but already this year we’re seeing demand falling to more normal levels and prices heading back down again.
“The extent of the decline depends on the length of the current lockdown and the Chancellor’s generosity in mitigating its impact, the speed of the vaccine roll out and the subsequent economic recovery. The market is yet to be truly tested by the end of the furlough scheme and mortgage payment holidays, both of which are currently masking job losses and distressed property sales.
“As we head towards the end of the stamp duty holiday on 31st March sellers should prepare for an increase in gazundering, where buyers reduce their offer just prior to exchange. A large number of deals will be hinged on an assumed stamp duty saving and if they fail to complete in time, buyers will suddenly need to find a significant amount of cash – or renegotiate the price.
“It’s not all bad news though, with a Brexit deal finally agreed that brings to an end four years of uncertainty, and positive action from lenders to reintroduce high loan to value mortgages and overturn bans on gifted deposits. Combined with declining prices and the end of the stamp duty holiday, we could see favourable conditions for First Time Buyers to make a return to the market later this year.”