UK house prices continue to perform strongly – in fact, at the fastest and strongest annual rate in over four years. But how do housing experts see the latest national lockdown, and the continued weakening of the economy, affecting them going forwards into 2021?
So far, despite – and to some extent because of – the coronavirus pandemic, prices have risen sharply year-on-year. In October, the Halifax building society reports, an average UK house cost over £250,000 for the first time, with house prices rising 7.5% compared to 2019. Detached houses saw 6% house price rises, with the average detached home gaining nearly £28,000 in total.
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This growth is largely down to the stamp duty holiday for properties priced at £500,000 and under, initiated by the government to keep the housing market boosted. But there has also been widely discussed interest in larger properties from city dwellers who want to find homes with more space, both indoors and out, in more rural – or at least less urban – locations. Contrast the average house price rise of 7.5% and the detached house price rise of 6% with the average price increase of flats at only 2%, and you begin to see the pattern: buyers want more space, and were prepared to pay more for a smaller pool of available properties.
'The average UK house price now tops a quarter of a million pounds for the first time in history,' comments Halifax's managing director Russell Galley. 'Overall we saw a broad continuation of recent trends with the market still predominantly being driven by home-mover demand for larger houses.'
But what will happen next? The Halifax is predicting that the market will – and has already started to – slow as the country suffers the blows of a second lockdown and all its economic implications. This prediction comes as house prices rose by 0.3% September to October – the weakest month since the stamp duty holiday was announced in July.
'While government support measures have undoubtedly helped to delay the expected downturn in the housing market, they will not continue indefinitely and, as we move through autumn and into winter, the macroeconomic landscape in the UK remains highly uncertain,' continues Galley.
'Though the renewed lockdown is set to be less restrictive than earlier this year, it bears out that the country’s struggle with Covid-19 is far from over... [W]e expect to see greater downward pressure on house prices as we move into 2021.'
However, other property experts are less cautious. Director of Benham and Reeves, Marc von Grundherr, comments: 'We find ourselves in a dramatically different place to this time last year and while shorter term growth rates are starting to show signs of a seasonal slowdown, house prices continue to hit record highs.
'A second national lockdown is unlikely to have any impact on current house price trends with the market remaining open for business and buyer demand remaining strong.
'While the hopper continues to overflow with a huge number of pending transactions waiting to complete, there should remain a consistent level of house price growth to carry the market through Christmas and well into 2021.'
Managing Director of Barrows and Forrester, James Forrester, is equally positive: 'While the nation continues to wobble over the economic turmoil posed by the current pandemic and a second lockdown, the UK housing market is using these headwinds of uncertainty to fill her sails as house prices continue to climb ever higher.
'Homebuyers continue to overrun the market and for many, the task of buying or selling may well have provided a welcome distraction to the daily doom and gloom of Covid and so we haven’t seen the decline that many market naysayers so keenly awaited.
'With the Bank of England announcing further economic support, we should see a degree of smooth sailing as the year ends.'