UK housing market kick-starts 2021 with positive signs

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Investment News
17 Feb 2021
3 min read
Blog
Investment News

UK housing market kick-starts 2021 with positive signs

17 Feb 2021
3 min read
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When it comes to UK house prices, the release of market indices from Nationwide and Halifax at the start of each month provides buyers with a good indication of how the market is performing.

The latest data released by both high street mortgage lenders have shown that the average value of properties in the UK increased by +6.4% and +5.4% respectively, year-on-year.

Both reports showcased a marginal cooling in market conditions between December and January however, this is something that is to be expected following the Christmas period, the announcement of lockdown number three, and also off the back of an incredibly strong period of market activity towards the end of 2020. 

UK house price forecast 2021

In the property industry, the big question right now is whether UK house prices will continue to rise in 2021? And when answering this question, it is important to consider the wider picture. 

The latest data released by the Government for UK housing market transactions have shown that the number of residential property transactions in December 2020 was 31.5% higher than in December 2019 and 13.1% higher than in November 2020. 

With the 31st March 2021 Stamp Duty holiday deadline looming, a significant climb in the number of transactions is to be expected – especially as more households have had more time to consider their living requirements over lockdown.

It is clear that the deadline of the Stamp Duty holiday has spurred movement in the housing market, with buyers and investors taking advantage of the significant tax savings on offer.

Despite calls for an extension of the Stamp Duty holiday from those in the property industry, nothing has materialised although, with the Budget planned for 3rd March 2021, there may still be time for an extension to be granted.

However, it’s not just Stamp Duty keeping the housing market moving. Robert Gardner, Nationwide’s Chief Economist, commented: “The typical relationship between the housing market and broader economic trends has broken down over the past nine months. This is because many peoples’ housing needs have changed as a direct result of the pandemic, with many opting to move to less densely populated locations or property types, despite the sharp economic slowdown and the uncertain outlook.”

House price predictions for next 5 years 

For many investors, looking at the wider picture of the housing market is more in line with the timeline of their portfolio strategy, opting to look at 5-year forecasts to help determine where they should invest and what they should invest in.

Savills revised up its UK housing forecast back in October 2020 and paints a stable picture for the property market. By 2024, Savills expects that UK property prices will increase on average by 20.4%.

According to the Savills forecast, regional property markets are set to outperform London, where prices are expected to climb by just 12.7% by 2024.

For more information, you can take a look at our recent post that focuses on UK property and housing market forecast 2021.

House prices after Brexit 2021

Most people will remember George Osborne’s bold claim that house prices after Brexit would drop in value between 10% to 18%.

The reality is that since the UK voted to leave the EU back in June 2016, the average property value has increased to a record £250,000. 

In fact, according to the Office for National Statistics, the average value of a UK property increased by 7.6% in the year to November 2020, up from 5.9% in October 2020.

Coincidently, this is the highest recorded annual growth rate the UK has seen since June 2016.

Despite the ongoing uncertainty caused by Covid-19 and Britain’s official withdrawal from the EU, the future looks very bright for UK house prices in 2021 and beyond.

For more information about investing in UK property and the locations offering the best growth opportunities, contact Town Square Invest to get your questions answered.