House prices and what is going to happen them post-Covid has been one of the biggest questions in everyone’s mind. New forecasts show the average property price is set to increase by £10,000 throughout 2021, with some areas set to have a price growth of almost 30% over the next 5 years.
But will this happen? What has caused this predicted increase? And what does it mean for the future?
What do we know?
According to new forecasts by Savills since the extension of the Stamp Duty Holiday, we are going to see a growth of 4% in UK house prices over 2021, which although is growth, isn’t as dramatic as the increases that we saw in 2020.
The Office for National Statistics states that last year we saw an increase of 8.5% when compared to pre-pandemic prices in 2019.
Nationwide also stated an encouraging figure, observed in February this year, where there was a 0.7% increase in seasonally adjusted house prices – which, with all the speculation around the end of the Stamp Duty Holiday, was quite surprising.
These figures suggest that the housing market is still looking strong and there’s no crash on the way, yet…
Why is this happening?
These statistics come as a surprise, with everyone waiting nervously for the housing bubble to pop and all prices to come crashing down. However, there has been some positive news which may be causing the house price growth to continue…
Firstly, it was announced on 3rd March that the Stamp Duty Holiday was going to be extended to September, with the £500,000 nil-tax band until 31st June and then a £250,000 nil-tax band until 30th September.
The extension on the Stamp Duty Holiday will encourage those who have been holding off to now enter the market, causing a boost to house prices as the demand increases.
There has also been the positive news of the vaccine rollout programme, with almost 22.6 million people, at the time of writing, with at least their first Covid jab.
This news creates a ‘light’ at the end of a very dark ‘tunnel’, with the government’s new ‘road map’ providing people with dates to look forward to, creating hope the pandemic will come to an end.
The falling number of cases and deaths due to Covid-19 is also creating a sense of positivity, in that the worst days COULD be behind us.
However, as we know, the numbers can go up much quicker than they come down, and so no one can predict whether or not this ‘road map’ will actually go to plan…
And what does this mean for the future?
As far as the housing market is concerned, Savills has forecasted an overall increase in the average UK house price of 21.1% by 2025.
Savills has also predicted the North West and Yorkshire and The Humber will see the highest growth in the next 5 years, with a 28.8% and 28.2% increase respectively. The area expected to see the lowest growth is London, at an increase of 12.6%.
The difference in growth can be explained by the growing demand for houses providing more space inside and outside, which places like the North West can provide for a lot lower price than London.
Whether these predicted figures will come to light remains to be seen and mainly relies on the Covid pandemic fading away.
But as we’ve seen with this pandemic, it’s so unpredictable, so no one can be sure what will happen going forward and whether this positive growth for the housing market will continue…
Millie is a perfectionist with a passion for property and writing articles. You’ll find her researching the latest housing trends and the newest up and coming areas worth investing in.