What could happen to house prices in 2021?

House price predictions are famously difficult to make, as the specific circumstances that determine how things turn out will only be known in hindsight.

Nearly every prediction for 2020 will have been blown out the window by the unprecedented pandemic, seeing house prices rise in a seemingly impossible market.

However, despite these challenges in making predictions, there are a few factors that forecasters believe could impact house prices in 2021:

  • Pent-up demand that built during the first and second lockdown will eventually work its way out, returning the market to its usual level of demand. This would decrease the demand for housing, potentially reducing prices as a result.
  • The Stamp Duty holiday in England, and the Land and Buildings Transaction Tax (LBTT) holiday in Scotland, will both end on 31 March. These tax holidays had reduced the Stamp Duty and LBTT due on a new purchase, meaning on 1 April, buyers will potentially see their Stamp Duty or LBTT bill increase. The Stamp Duty and LBTT holidays have been credited with driving demand over the last few months, so the end of the tax breaks could see a reduction in the number of transactions, softening prices.
  • The workplace furlough scheme is set to finish at the end of April. Whilst the furlough scheme doesn’t have a direct impact on the property market, uncertainty in employment for those who relied on the scheme could reduce the number of potential buyers.

What do the experts think?

Opinions are very much divided over whether house prices can maintain the upward momentum they saw in 2020.

Rightmove, the online property search website, has forecasted continued growth, albeit not at the rate of 2020.

Property data expert Tim Bannister forecasted a “4% price rise in 2021” rather than a continuation of the “unsustainable 6.6% national average seen this year.” The “removal [of the Stamp Duty] will not be make or break” for many buyers, he also added.

Zoopla believes that property prices in the UK will rise by an average of 1% in 2021, although they predict the mini boom will continue at the start of the year with prices rising by 5% in the first quarter as buyers rush to beat the Stamp Duty deadline.

Estate agents such as Savills and Hamptons believe prices will remain the same in 2021.

However, according to the Centre for Economics and Business Research (CEBR), house prices could fall as much as 14% this year. Meanwhile, the UK’s biggest lender, Halifax, says house prices will most likely fall between 2% and 5% this year.

Get in touch

At Edinburgh Mortgage Advice, we can help you decide whether now is the right time for you to be looking for a new home and help you to find the right mortgage.

For more information, please email [email protected] or call 0131 339 2281.

Please note:

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

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