House price BOOM: Will house prices drop in 2021? Experts weigh in on market future

Martin Lewis gives advice on paying mortgage with savings

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House prices rocketed by the most in more than 16 years this month, soaring by 13.4 percent from June 2020. In monthly terms, house prices were 0.7 percent higher than in May. Many homebuyers may have rushed to complete their house purchases before the Stamp Duty holiday starts to taper off next month.

The Stamp Duty holiday was introduced by Chancellor Rishi Sunak last year as part of a wide package of COVID-19 support measures.

The first £500,000 of property purchases in England and Northern Ireland are exempt from Stamp Duty Land Tax (SDLT) until the end of June.

A smaller £250,000 tax-free allowance will run until the end of September 2021. spoke to property experts about whether house prices will continue to rise later in 2021, following the end of the Stamp Duty holiday and the further easing of lockdown restrictions.

Will house prices drop in 2021?

Based on the current housing trends, experts speculate it is unlikely that there will be a major drop in house prices later this year.

However, one expert said the end of the Stamp Duty holiday and easing of lockdown restrictions could mean the market begins “levelling out slightly”.

Steve Jacob, CEO of Fabrik Property Group, told “House prices are still rising, but with the Stamp Duty holiday ending I expect there will be less demand in the market.

“At the same time, as Covid restrictions ease and people move about more, I think we’ll see supply increase as well.

“So reduced demand and increased supply could lead to the market levelling out slightly in price terms.”

If house prices continue to increase in 2021, another expert said it is likely prices will increase at a “less aggressive rate” than has been the case in recent months.

Anna Page, COO of SlothMove, told “As we know, house prices have soared in 2021, increasing five percent from March to June.

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“In the run-up to the Stamp Duty relief [deadline] we are seeing continued growth.

“Looking forward, it’s likely that house prices will continue to increase but at a less aggressive rate.”

As well as the Stamp Duty holiday, a range of factors are prompting many to move, such as the need for more space as working from home becomes more common.

Ms Page added: “It is important to remember that the Stamp Duty relief is just one of many factors that are contributing to the rise in prices.

“We also have inflation, a decreased need for workers to be based in mega-cities, and due to the amount of time we’re spending at home due to the pandemic, we also have a population who are looking for alternative places to buy.”

David Westgate, group chief executive of Andrews Property Group, also commented that “the race for more space” could turn out to be a “longer-term trend”.

Mr Westgate said: “The end of the full Stamp Duty holiday today may see activity cool a little, but not significantly, as there are plenty of buyers who still have time and the motivation to complete before the tapered relief ends on September 30.”

“Even when the tapered relief draws to a close, I don’t see prices cooling off dramatically.

“Demand is vastly outstripping supply and will do so for a while, with a race for more space pushing house prices higher, particularly larger properties in more rural areas, as buyers look to make lifestyle changes as a result of the pandemic. This feels like a longer-term trend.”

Many people have saved considerably during lockdown with the intention of purchasing property, so this could also contribute to demand later this year.

Ben Gent of property investment platform Assetz Exchange told “As we come out of the pandemic there is a huge amount of pent up savings, some of which will find its way into the house market.

“The UK economy is set to bounce back strongly and the Government will continue to support the economy with fiscal and monetary stimulus.

“We predict that house price growth eases back from its current gangbusters double-digit increases and will fall back closer to the longer-term trend of moderate single digits for the remainder of 2021 and this trend will persist in the coming years.”

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