Will house prices drop? Experts forecast property market in run up to Christmas

Phil Spencer discusses state of the property market with expert

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The property market has seen UK house prices soar since the start of the pandemic, with no signs of booming sales slowing down. Despite many predictions for a decline in property sales following the end of furlough and the stamp duty holiday, the demand to move house continues to fuel the market. As we reach the end of the year, Express.co.uk spoke to property experts across the country to find out their property forecast in the run up to Christmas.

Will house prices fall in 2021?

With just under two months left of 2021, there is little time left for the property market to see any significant change.

As Christmas draws closer, the traditionally ‘quiet’ period for the UK’s housing market also begins to set in. But, there is uncertainty in just how quiet the market will be after a year of profound growth in both house prices and demand.

Speaking exclusively to Express.co.uk, David Jabbari, CEO of Muve, a nationwide specialist conveyancer said: “Santa will not be delivering a drop in house prices for Christmas – it is simple demand and supply.

“House buyer demand is running at 28 percent higher than the five-year average while the stock of homes for sale is 38 percent lower.”

How will mortgage rates affect house prices?

Experts say prices are increasing across the country, though it is greatest in the North West and East Midlands, and lowest in London.

Despite rumours of an increase in mortgage interest rates, there is still uncertainty about the effect this will have on house prices over the coming months.

Ross Counsell, chartered surveyor and Director at Good Move, told Express.co.uk: “Mortgage rates are currently super low, with many lenders offering sub one percent mortgages to buyers, which in turn increases demand for properties and consequently leads to higher house prices.

“However, inflation is expected to rise above four percent by the end of the year which will make home loans more expensive, but could slow demand for properties, making house prices decrease in the process.”

 

Mr Jabarri does not believe mortgage rates will cause a significant reduction in house prices, as demand will remain high.

He added: “I do not believe that this will have a significant impact on demand, but it may mean for example that the UK average house price increase adjusts from 7 percent to closer to 3 percent.”

As long as the demand to move home remains unchanged it is possible that the uncertainty around the future of the market will remain for some time.

Speaking exclusively to Express.co.uk, Alex Mackay, Managing Director at Mishon Mackay said: “The market is still strong and if you’re selling your home in November, you will sell it and it will be at a good price.

“The unknown is the effect of increased interest rates, which is imminently looming on the horizon. But it’s hard to believe that as the cost of money increases it will not have a negative impact on prices in the market.”

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How have property prices changed over the past month?

Property statistics from October show that average property prices in the UK now stand at £344,445 – a 1.8 percent increase from September.

This significant increase has been remarked as the highest monthly rise in property prices since October 2015.

Despite the final phase of the stamp duty holiday coming to an end on October 1, property experts have all agreed that it could be too soon to see the full effects of this significant tax break period.

Ross commented: “What’s interesting to see is that many experts predicted that house prices would fall post-furlough scheme and stamp duty holiday, which both came to an end in September.

“Ultimately, it is far too soon to fully see the effects of the stamp duty holiday and furlough scheme ending on the property market. So for the next two months I do expect house prices to continue to be high, although not as high an increase as we’ve seen for the past few months.”

How will prices change between now and Christmas?

Potential buyers should try to hold off until the new year before making a purchase to allow time for the market to stabilise, said Ross.

He added: “I do believe that the housing market will be less competitive as we go into 2022, with buyer demand settling back down to more normal levels after Christmas.

This will make the market easier and more affordable to navigate.

Although the first six months of this year were extraordinary with pretty much every house selling within days of coming to market, and often over the asking price, the south coast saw an increase in prices of around 10 percent.

Alex explained: “With a local 10 percent price increase this year we can all probably afford a break.

“We all know that interest rates have been at an unsustainably low rate, so I suspect a new normal is about to look us in the eye.”

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