After an impressive year for property prices, despite the economic uncertainty created by the Covid-19 pandemic, what does 2021 hold for the market?
According to property website Rightmove, house price inflation is likely to slow next year, but still come in at 4%.
Rightmove thinks the market will retain a lot of its momentum from 2020, despite the end of the stamp duty holiday and an expectation of rising unemployment levels.
Looking at asking prices for homes first advertised on the portal between 8th November and 5th December, these are 6.6% up on the same period a year earlier.
However, this rate of house price growth looks to be unsustainable.
A month earlier, the year-on-year asking price growth was up 6.3%.
When lockdown restrictions were eased in the summer, pent up demand for property moves helped fuel the market, with many buyers seeking larger homes, more open space, and the ability to work remotely.
This mini-boom in the property market was also supported by the withdrawal of stamp duty on purchases up to £500,000; a government incentive that comes to an end in March.
However, Rightmove thinks that underlying demand and the very low cost of borrowing could well sustain property market activity in 2021.
Tim Bannister, director of property data at Rightmove, said:
“There’s likely to be a lull in quarter two unless the stamp duty holiday is extended, but for many buyers its removal will not be make or break, though may lead them to reduce their offers to a degree.”
In a recent survey of economists for Reuters, they expected the UK property market to stagnate in 2021.
A variety of factors are likely to influence property prices next year, including the short-term economic impact of the Brexit transition period coming to an end, and rising levels of unemployment.