Highest growth in six years: Will house prices continue to soar in 2021?
The Halifax reports that UK house prices increased by 6% in a booming second half of 2020, despite being closed during the first national lockdown. What are experts predicting for this year?
The ‘lockdown demand’ for extra space, inside and outside of the home, and the stamp duty payment holiday are two main reasons for the increase – the highest growth in UK house prices since the mid-2010s. The trend is supported by another lender, Nationwide, who reports a 2020 growth figure of 7.5%. These increases mean that today’s average home is valued at a record high of just over £253,000. Mortgage approvals are also at a 13-year high, according to Halifax.
Most experts forecast downward pressure on house prices as we move into 2021, reflecting the UK’s pace of economic recovery. There are signs of the market slowing, with Halifax expecting to see a fall of up to 5%.
Rightmove, however, predicts a 4% rise in 2021 prices and other analysts see the housing market picking up later in 2021 if the UK economy bounces back, thanks to the national vaccine programme. This will be supported by low borrowing costs, with interest rates set to remain low. Forecasts should also be seen in the context of a government keen to support younger people in getting onto the property ladder. Last autumn at the Conservative Party conference, Prime Minister Boris Johnson announced plans to not just build more homes but increase home ownership too.
