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.”
He’s wrong.
The public are already considering missing the deadline.
I’ve had at least 30 conversations in the last 72 hours alone. All instigated by the client.
It’s either;
‘reach compromise on the additional and share the burden’
Or
‘we would carry on, as the stamp amount isn’t enough to pull out when you extrapolate that amount of the years we will live there.
Moreover, even those that have said ‘we will ask for the amount off the house’ have gone on the say they fully expect to be doing the same on the one they’re selling.
I fully expect FTB to be doing the maths right about now on affordability. The majority aren’t stupid.
At the current rate of house price inflation the leeway is baked in.
Expect prices broadly stagnant, activity to drop, but only during a period of readjustment in financial planning.
There’s still hundreds of thousands of moves&purchases&sales from the four years of Brexit malaise yet to come through.
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I agree. As for viewings, still good demand for January.
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24,000 quotes in a quarter is about 100,000 for the year, about 10% of completions 5% of agreed sales- that is a reasonable sample.
I’d be interested to know where the sample is focused, London & South East or nationwide, as that will give an insight into yet another property price index, none of which align.
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You can forget about house prices falling by 6% in quarter. It isn’t going to happen.
However the really bad news will be the expected drop in transactions. That could fall 20% below last year’s levels if we are not very careful.
In the very short term you can see a reduction in supply as well as demand which will lead to much less work for us and the conveyancers but only a small reduction in prices.
It is quite possible to see an annual reduction of 5% but it will never happen in 3 months.
It is definitely time to close ranks and be very careful about costs.
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In the first 1/4 of 1989 prices fell back faster and harder than that.
Low interest rates have inflated asset prices and over extended the property ladder to a point where it is massively unstable.
The people able to move have moved and completed those who are chain dependent haven’t. I wouldn’t think of saying it isn’t going to happen because the ending of double MIRAS is evidence that it could.
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Double MIRAS was very different as it fuelled demand but not supply. Many new buyers were getting into the market which drove prices up exponentially over an 8 month period. The SD holiday increased supply almost as much as demand on average sales were in a 5 property chain needing only one unencumbered purchase for every 5 sales) which was great for agents and conveyances as numbers of transactions were at record levels, however prices only increased to a level easily sustainable bearing in mind the Brexit years of slow increments. Also in 1989 interest rates went from 7-12% almost doubling mortgage payments for people who had no equity having taken out 100-120% mortgages thus driving prices down and repossessions up, a dreadful downward spiral taking up to 40% off prices in 18 months. The FTB market is still in the doldrums for secondhand homes due to the new homes HTB scheme. Boris needs to get 95% loans available for FTB’s to fuel the first time sellers market.
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‘Boris needs to get 95% loans available for FTB’s to fuel the first time sellers market‘.
More Government tinkering advocated; where do you think this is going to take the market in the full scheme of things?
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Low borrowing costs, limited stock and continued demand are not factors that are likely to cause a drop in prices. More likely we will see a reduction in transaction volumes. With increased skills needed to negotiate transactions at the start, through to exchange, transactions taking longer, and customer and client engagement increased this comes with a time cost for agent. With these factors considered then it important to ensure fees are set at a correct level a small increase on average fee from the previous year will help mitigate this. Can’t see a fall in prices. But then we live in a world were you need not just plan a and b,,, but CD and E.
Good luck in 2021 everyone.
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Yep, 2021 is the year that all those agents that chip away on fees to gain the instruction will be caught out. Those that are selling for free….well!
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Really Moving….? Who are they!
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……Said that really well known market commentator…’Reallymoving’……
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never heard of him, where do you find these people?
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Unfortunately so many analysts are poor at maths. The average price of all sold properties will undoubtedly be lower as the SD holiday benefited higher price buyers the most, so demand has been higher in the middle to upper market. However also so has supply as most buyers were also sellers therefore prices didn’t increase as much as expected but numbers of transactions in that sector have been WG up which skews the AVERAGE price. What they should be looking at is whether the average price of particular house types is increasing or decreasing not just add up the total value and average it out. It’s a Stupid way to work out whether prices are increasing or decreasing. We still need Boris to come good on his announcement to get 95% mortgages back in the market for FRB’s. That is what will fuel this year’s market.
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Well for us, still a very busy market, properties still coming on and selling quickly.
I dont see prices dropping at all in Q1 maybe stagnate a bit in Q2 but cant see them dropping anything like 6%
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It’s funny and so hypocritical.
if this guy had said prices will fly upward by 6% this year then you would have been all over him in a positive sense instead of ridiculing him, why are you so set on prices when you should be looking at numbers of sales and the best and easiest numbers are already on your books, all you have to do is do (what good agents do after admitting they tried and failed to sell) get a reduction in price.
The points made were mostly correct except perhaps price falls of 6.2% but who really knows, I’m getting emailed on properties now that were 25-75k higher in November and a couple that were 100 and 145k! So let’s see, however, new lower prices bring with it another good market, you just have to see and sell the positive of that instead and like 1989-91 and 2007-2008 you will come through it.
Happy new year to you all.
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