House prices: Will house prices fall next year? MAJOR CRASH coming within MONTHS
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The UK’s property market has enjoyed a mini-boom since reopening after lockdown. House prices stagnated for months as Brits were forced to stay in their homes, forcing the property market to wait at a standstill until life got moving again. Over the summer, the demand for homes went through the roof as lockdown restrictions eased and people started resuming their plans. But now, as we look into 2021, people are wondering whether the opportune time to buy a property will last.
Will house prices fall next year?
According to the co-founder of Rentround Compare Letting Agents, Raj Dosanjh, house prices will fall further next year.
Mr Dosanjh told Express.co.uk he thinks property prices will dip when the Chancellor’s stamp duty holiday ends in 2021.
He said: “In my opinion, house prices will certainly fall. They will fall when the stamp duty holiday and furlough ends in March 2021.
“The house prices right now do not reflect the reality of the economy.
“Household incomes are lower than pre-covid times and the GDP of the country is at the lowest point since 2013.
“The pandemic has caused a number of businesses to cut their operations and they may never recover.
“In addition, a vast number of staff have been placed on furlough, which won’t last forever.
“The combination of businesses not returning to normal procedures for a long period of time and furlough ending will place people in a loft of financial pressure.”
Mr Dosanjh said the stamp duty cut provided welcome relief for home buyers, and when the holiday ends, houses will cost more.
This will likely affect the price of houses as fewer people look to make their way up the property ladder.
He added: “In parallel, the stamp duty holiday has caused a spike in house prices, when that ends, people will have to pay more when purchasing a property.
“With financial stress caused by reduced business operations and furlough coming to a halt, then it becoming more costly to purchase a property, demand for properties will reduce and therefore prices will fall.”
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He explained: “People looking to buy who missed purchasing during the stamp duty holiday will be poised to wait until prices drop to accommodate buyers forking out the additional stamp duty.
“In addition, as many tenants could be facing financial stress, investors looking for buy-to-let properties may be sceptical in their ability to get tenants, therefore reducing demand even further.”
On whether this is the best time to buy a house, Mr Dosanjh said it depends entirely on whether you’re going for a property to live in or buying to rent out.
He said: “If you’re planning to purchase a property to live in, then you’ll be able to take advantage of the stamp duty holiday.
“If you’re buying a buy-to-let, in my opinion, there are substantial risks involved. Furlough is ending in March, which will place people under financial stress if their job is no longer available.
“If your tenants are in such a scenario, this will put risk for you obtaining your rent.
“In addition, there are concerns around regular living habits changing the game for landlords. Will the student market return to normal? Are people still looking to live in London or can they work from home, therefore reducing London property demand?
“There is a lot of uncertainty for landlords, therefore holding off, even though it may mean missing out on stamp duty breaks, may be a sensible option.”
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