How will Covid-19 affect UK house prices in 2021?
Covid-19 has caused widespread disruption and economic uncertainty, but it’s not all bad news. The property market strengthened in 2020 and there are positive signs for homeowners looking to sell their house quickly in 2021. In this guide, we’ll explore the impact of the pandemic on UK house prices.
What happened to UK house prices in 2020?
The headlines have been dominated by Covid-19 for the last 12 months, with borrowing at an all-time high, thousands of people affected by illness and businesses struggling to survive. While many industries took a hammer blow as a result of Covid-19 and the lockdowns that were imposed to try and contain and reduce the spread of the virus, the housing market enjoyed an upturn, particularly in the second half of 2020. Estate agents across the country experienced an increase in inquiries, viewings and offers, and house prices rose, particularly in more rural areas, with many buyers seeking to leave the cities during the lockdown to enjoy green, open spaces. Land Registry statistics for November 2020 indicated a month-on-month price increase of 1.2% and a year-on-year increase of 7.6%. The average house price in the UK reached £249,633 at the end of 2020.
How will Covid-19 affect house prices in 2021?
Quick house buyer Susan Jones at Ask Susan comments that the property market experienced a mini boom in 2020 despite the economic gloom brought about by the Covid-19 crisis and local and national lockdowns. In 2021, the picture is less clear, as there is a degree of uncertainty about the impact of the end of the stamp duty holiday and the duration and effects of the current lockdown. The stamp duty holiday has inspired buyers who were interested in moving to buy in 2020 and the start of 2021 to take advantage of savings, and it is possible that the market will slow once the temporary holiday ends in March. There is also the possibility of further lockdowns and restrictions due to risks posed by new variants and consumer confidence may be hit by rising unemployment rates and difficulties associated with getting low-deposit mortgages.
Despite these factors, forecasts for 2021 are largely optimistic. The market is still moving and the vaccine and the speed of the UK rollout have inspired confidence. Rightmove predicts that house prices will increase by around 4% in 2021, while Zoopla expects prices to rise by 5% by the end of February before falling to 1%. Some estate agents, including Savills and Hamptons expect prices to level out in 2021. Halifax suggests that prices will fall slightly by around 1%. Early indications outline a period of sustained growth over the course of the next five years.
Will lockdowns affect the speed of sales?
House sales picked up quickly in 2020 and this trend is expected to continue, albeit at a steadier pace, in 2021. Although lockdown measures are currently in place and restrictions are likely to continue for some time, it is still possible to move house, to arrange viewings and to buy and sell properties as quickly as possible.
Summary
Covid-19 has caused profound problems for businesses across several sectors, but there are positive signs for the property market in 2021. 2020 was a good year for buyers and sellers and with a vaccine now being rolled out at pace, house prices could continue to rise in 2021.