Halifax is issuing a warning that there could be a significant drop in average UK house prices during 2021, as the longer-term effects of the COVID-19 pandemic start to bite.
The bank is currently forecasting a drop of anything from 2% to 5% in the average price of a home over the course of the year. However, it should be noted that, even if this prediction proves to be correct, that drop would still not cancel out the rise in the average price that occurred throughout 2020, as that was 7.6%.
The UK housing market bounced back remarkably strongly from the initial impact of the pandemic and the shutdown in the spring. However, Halifax is basing its prediction of a price drop on the expectation of rising unemployment figures once the various state support schemes come to an end.
Halifax’s Managing Director, Russell Galley, told Mortgage Introducer that higher levels of unemployment, plus the end of schemes such as the stamp duty holiday, would be likely to bring a lowering of prices, adding:
“The key long-term issue for the housing market remains the inequality between generations and across the income spectrum, and specifically the ability of the young and lower-paid to access good quality housing that meets their needs.”
While this is not such good news for those hoping to sell their homes in the coming year, it could open the market to some of those younger people looking to buy, suggesting advisors with CeMAP training should target them.