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Properties Articles

UK property value forecast 2021

Published: 25/02/2021





The property value in the UK has seen an unexpected increase despite the various disruptions taking place throughout the year. One would expect the UK property prices to drop as many have been through financial turmoil this past year. However, reports claim that house prices have drastically increased since 2019. The reports say that the prices have shot up by approximately 62 billion pounds. These numbers only apply to agreed sales. In addition to this, certain property websites claim that the average going rate of houses has shot up by 1.3% after 2019 and is now approximately 200,000 pounds.

Reason for the price increase:


The implementation of lockdown has also introduced the culture of work from home. Therefore, many people have looked to move away from the bustling and claustrophobic cities to remote areas. 

However, according to the experts at Knight Bridge Real Estate, this small rise in UK property value will soon see a dip. This is due to the following reasons: 

  • Stamp Duty Holiday: The Stamp Duty Holiday came into force on the 8th of July 2020 and will end on the 31st of March 2021. Therefore, the sale of properties will see a decline after this holiday. The purpose of the Stamp Duty Holiday was to decrease the rate of stamp duty to 0%. This applies to all properties that are priced at 500,000 pounds and under. 

  • Furlough Scheme: This scheme helped to aid people in this trying time by paying them around 80% of their wages. The official date for the end of this scheme is the 1st of April. However, there have been rumours that the scheme will receive an extension to May. 

  • Help to Buy: Help to Buy is a program that aims to assist people in their endeavors to own a house. The program confers an equity loan on the individual that aims to buy a property. The down payment usually involved 5% of the price of the property. However, since 2021, there have been changes to the scheme. This involves price caps based on the region. 

  • Lack of confidence: The multiple lockdowns and the slow rollout of the vaccine have many people thinking about things not related to property and housing. In fact, most individuals will be restricted to their homes and unable to visit properties. 

Predictions:


Although the number of sales occurring in 2020 saw an increase, the sales will see a decline this year. According to the given situation, fewer people will be interested in buying properties this year. 
The prices of houses will not see a hike of 1% as thought previously. In general, the house prices will be flat this year.

However, with the stamp duty holiday deadline, many will look to invest in property before the 31st of March. Therefore, many buyers will flock to the housing market willing to spend on a property. This may not have a lasting effect on the market but will be able to sustain the same prices for the first quarter. The house prices will see an almost 3-5% decrease by Christmas.

In addition to this, one will also have to factor in the conditions of the current economy and labor markets. The most changes that will take place in the price of the houses will be due to the working conditions of the general public. As unemployment continues to rise, fewer people will be opting to buy a property of any sort. Therefore, the prices can see a drop. However, the British Government has also sought to extend the duration of some of the schemes, such as the Furlough Scheme. This may stimulate the economy and further sustain house prices. 

House prices will not see a drastic decrease, unfortunately. It would require a micro collapse of the market to see a significant reduction in UK property prices. 

Potential recovery of the market:


Although 2021 may be a flat year for the market, UK property prices will rise in the coming years. As the lockdown restrictions continue to ease after the rollout of vaccines, the economy will start to repair itself. Some predict that the prices will rise by a high margin once 2022 rolls around. 

Therefore, all in all, there is no significant decrease or increase in current house prices. But one could avail the predicted decrease in prices by the end of the year. However, for more information regarding prediction, go through our Knights Bridge website. In addition to receiving near accurate predictions, one will also be able to avail advice regarding property and housing.