Property prices soared by 8.5% in 2020. Yet between March and April 2021 prices fell by 1.9%. This equates to a £5k drop in the average UK property price. The recent month on month fall in price shows signs of the property market beginning to lose momentum.
What caused prices to drop?
As the original Stamp duty holiday deadline was approaching in March 2021, many buyers scrambled to bring their property purchases forward in order to meet the March 31st deadline. The natural consequence of this was a slowdown in property sales during the month of April.
Will Property Prices Continue to fall?
There are mixed opinions on what will happen to property prices in the second half of 2021 and early 2022.
Short Term View
Prices may rise due to the following:
- Similar to what we saw in March, the lead up to the June 30th deadline will see more and more buyers scramble to get their purchases over the line and lock in savings of up to £15k on stamp duty fees.
- In London in particular, the month of May was the busiest month for properties going under offer since May 2014. Properties in Prime London locations saw a 40% increase in the number of properties sold during Q1 2021. As vaccinations continue to be rolled out globally and borders open up, foreign investors will look to come back into the Prime London Market.
- The reduced stamp duty threshold between 1st July to 30th September coupled with the increasing demand for outdoor space, will contribute to the continued rise in prices.
- Recent stats show that there are now less properties available for sale. Estate Agents usually have 35-50 properties listed for sale at a time. Some Agents in the South West of England claim to have as little as 10 properties listed for sale and a small number of Agents claim to have no stock left at all. The lack of supply will keep prices high.
Medium to Long Term View
With the stamp duty holiday and the furlough schemes coming to an end, the property market will begin to cool down significantly. Prices may begin to fall from the highs we have seen throughout the pandemic. Many buyers who moved their property purchases forward in order to benefit from the stamp duty holiday may be at risk of losing their jobs when the furlough scheme ends. How the government plans to manage the spike in unemployment that may occur and its impact on peoples’ ability to make their mortgage repayments, will play a key role in how hard prices will fall when we go over the stamp duty holiday & furlough cliff edge.
If you are looking for property strategy to help you weather the uncertain times ahead, or simply looking to buy your first home, please get in touch with us here at Trevlyn Properties. We are always happy to assist.