2020 was a financially difficult year for many, with many people being placed on furlough with a reduced income. Add to this the lockdown which forced people to work from home and be very restricted in what they could do socially and for exercise and the fact that non-essential services had to close, and it amounted to a pretty tough year for all. Given all this negativity, we could all be forgiven for thinking that the housing market would take a dive forcing prices down, but according to Zoopla this will not be the case in 2021.
House Prices growth into the first quarter of 2021
According to Richard Donnell, Zoopla’s research and insight director, UK house prices in 2020 grew by 4% with him predicting this growth will continue into the first quarter of 2021 with a slowdown afterwards but Donnell feels that it would take something very dramatic for house prices to stray into negative territory in 2021.
So why do the people at Zoopla feel so confident that house prices will remain strong into and throughout 2021?
The freeze on stamp duty is set to continue for the first 3 months of 2021 and this will make buying a new home more affordable for many, making it a much more attractive proposition and this will prop up the property market at least in the first few months of the year.
Increase in cash buying is supporting the housing market
There has apparently been a large shift in people’s view on where they live with many now wanting to move out of city areas and into the countryside. This has been very much driven by people reviewing their lifestyle choices during the enforced lockdown. There has been a surge in people from the major cities selling properties worth over £1 million and moving to the countryside where they are purchasing cheaper properties with cash. This increase in cash buying is supporting the housing market and keeping prices buoyant.
The extension to the Furlough scheme is also helping keep the housing market dynamic according to Donnell. Although it ends in April 2021, he expects that the support given by the scheme will mean people will be able to afford to keep their homes and as such the vast majority of sales will be elective, which means that prices won’t be driven downwards.
In all, it would appear that the predictions for the housing market in 2021 suggest that prices will remain strong and that the housing market will not see a dip. In fact, it is predicted that house prices will continue to rise at a good rate throughout 2021.