The Centre for Economics and Business Research (CEBR) is predicting a significant drop in the average price of a house from next year, due to the effect of COVID-19 on the economy.
In a recent report, CEBR has forecasted that the housing market will start to see this drop once the end of the Coronavirus Job Retention Scheme begins to have a noticeable economic effect on the country, and once the changes to stamp duty come to an end. CEBR argues that several different factors are currently combining to keep UK house prices artificially inflated, but that this situation cannot continue indefinitely, and that they will drop by 14% during 2021.
One of these influencing factors is the demand that built up while the housing market was shut down. This added up to roughly 150,000 people looking to buy, and propelled prices upwards in early summer when the market opened up again. There were more buyers than sellers at first, which further drove prices up.
Other factors, like the house repossession freeze, also contributed to demand, outstripping supply and keeping prices high, while the current reduction in stamp duty is expected to fuel a brief rise of 1.2% in the average UK house price.
However, the CEBR report points out that these are temporary, and it says that prices will begin to go down before the end of 2020, before falling further in the first part of next year.
This could be good news for both homebuyers and mortgage advisors with CeMAP training, as many prospective buyers are currently priced out of the market.