House prices likely to drop by 6% in 2021 but expert urges buyers ‘not to panic’
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House prices have been stronger than ever during the backend of this year as more people take advantage of the UK’s stamp duty holiday. However, with the SDLT holiday due to come to an end on March 31 2021, a shift downwards in prices is likely to take place. Currently, the stamp duty holiday applies to properties bought for under £500,000.
The holiday, introduced by Chancellor Rishi Sunak in July, has encouraged a property boom.
Product Technical Manager Nicholas Morrey from independent mortgage broker John Charcol spoke exclusively to Express.co.uk about his house prices predictions for next year.
Mr Morrey, who is also the head of John Charcol’s specialist mortgage technical services team, predicted house prices could see a slight drop next year.
He said: “I think we’re going to get a correction in house prices, possibly a five or six percent drop in prices.
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“I don’t think we’re going to get a wholesale property crash.
“This is mainly because demand will fall because of stamp duty coming back into effect.”
Mr Morrey explained that anyone who was thinking of buying a house in 2021 is likely to have pushed this forward to this year in order to take advantage of the stamp duty holiday.
The stamp duty holiday has been bittersweet for buyers over the last few months as any savings from the holiday have effectively been cancelled out by the significant rise in house prices.
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“While I can see prices dropping seven percent next year, I don’t think they’re going to go much further in a downwards motion,” he added.
Mr Morrey said it’s likely the housing market will drop, stabilise and then “pick back up again” at the end of 2021, perhaps into 2022.
“Prices are going to go up, and then down and then up again,” he said.
“But over a two-year period, including the pandemic, they will end up roughly the same.”
For anyone looking to move who is concerned about missing the stamp duty holiday deadline, Mr Morrey said “not to panic” but buy for the investment.
He said: “I always say to people don’t panic.
“If you want to buy, if you want to move, please do because it’s a long-term investment, not just a saving on the stamp duty.
“A lot of people will say, ‘I’ll buy when the prices have dropped’.
“But if you are also selling, you will struggle to sell your property because it’s a weak market.
“The supply will be very limited. The chances of there being decent properties that you want to buy or a good choice of properties, is fairly slender.”
Mr Morrey explained that buying when the market is weak only tends to benefit first-time buyers.
“But even then, they might look at the market and go ‘there’s nothing I want to buy because no one is selling’.”
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