British house prices are set to grow an average of four per cent in 2021, according to property website Rightmove, despite the looming end of a tax break and forecasts of rising unemployment.
Rightmove said asking prices for property first advertised between 8 November and 5 December were 6.6 per cent higher than a year earlier, after Brits “reprioritised housing needs high on their life agendas” during the pandemic.
Britain’s housing market received an unexpected boomed after the first raft of Covid restrictions were lifted in June, as people sought bigger houses and jumped on a temporary reduction in purchase taxes.
In July, the government announced a stamp duty holiday for properties purchased for under £500,000, leading to a build-up of transactions over the last few months as buyers pushed to complete sales before the deadline.
The tax break is due to expire at the end of March, but Rightmove said underlying demand and cheap borrowing costs were unlikely to dampen activity.
“There’s likely to be a lull in quarter two unless the stamp duty holiday is extended, but for many buyers its removal will not be make or break, though may lead them to reduce their offers to a degree,” Rightmove’s director of property data, Tim Bannister, said.
He added: “Our 2021 forecast of a four percent price rise is more conservative than the unsustainable 6.6 percent national average seen this year.”
The Bank of England in October reported that lenders approved the most new mortgages since 2007 this year, while mortgage lender Halifax said house prices had risen by the most since 2004 in the five months since lockdown ended.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “At the coalface, we are experiencing much the same but expecting a busy first quarter as buyers and sellers rush to take advantage of the stamp duty concession.
“However, we don’t anticipate a cliff-edge scenario at present. Nearly all sales agreed seem to be proceeding to exchange of contract, unless exceptional circumstances prevail and prices are not being widely renegotiated in anticipation of a market fall due to Brexit, the pandemic or potentially worsening economic news.’