New Year house prices forecast to drop after Christmas peak
Reallymoving, which provides quotes for homemoving services, predicts that house prices will fall by 1.2% in January and 2.5% in February.
Before the decline in prices begins, the average price paid for a home will reach a new of high of £352,239 before falling to £343,312 by February 2021.
Reallymoving has based its prediction on analysis of 30,000 conveyancing quotes which provide an early snapshot of the short-term housing market.
For example, the forecasted data for December 2020 to February 2021 is based on registrations for conveyancing quotes from September to November 2020 respectively which typically take around three months to complete.
The firm’s analysis also found that the proportion of first-time buyers in the market fell by 12% in the last six months compared to the same period last year.
Rob Houghton, chief executive of Reallymoving, said: “Our prediction of a New Year change in fortunes for the housing market has been further strengthened by the latest data which clearly shows price growth entering a downward trend in January and accelerating in February.
“The mask is beginning to slip on the two-tier housing market of recent months, which has seen activity from equity-rich homeowners who are less affected by the pandemic, concealing problems at the lower end of the market where first-time buyers have benefited little from the stamp duty holiday and faced considerable challenges securing higher loan to value mortgages.”
“The kind of growth we’ve seen over the last few months was never sustainable. Despite positive vaccine news, which will certainly boost confidence that the end of the pandemic is now in sight, there are significant challenges for the housing market to overcome in the short term, including the end of both the stamp duty holiday and the furlough scheme on 31 March, which is likely to result in further downward movement in prices over the first half of next year.”