House Prices will Decline in 2021 as COVID-19 Impact hits, according to Halifax

It is expected that the price of houses in the United Kingdom will fall by as high as 5 percent in 2021, because of the rate at which unemployment is increasing and the end of the stamp duty holiday by the government. The top lender in Britain, Halifax, stated that the pandemic inflicted economic fallout would meet the property market this year, after a boom that was unexpected last year. It’s predicting a fall in the price of houses between 2 and 5 percent for the whole year.

They believe that the supportive government policies had delayed the coronavirus crisis’s impact on the finances of households, and the policies include the furlough scheme. Well, the support is gradually scaling back in 2021, and with the wage subsidy program closure from April, it means there’ll be a rise in unemployment.

Because of this, the property market will be under pressure after huge price rises last year. The MD at Halifax, Russell Galley, stated that even though the economy should start recovering this year, assisted by the release of coronavirus vaccines, there’ll be an inevitable adjustment in the job market to the alterations in demand that are happening, and there’s going to be a rise in unemployment. While the stamp duty holiday will expire in March, including lesser levels of request, there’s a likelihood of the housing market activity slowing down.

The housing market prediction comes as the economy of Britain is under new pressure due to the new strain of coronavirus, stricter lockdown controls in almost all parts of the country, and chaos at the borders of Britain with just a couple of days to go before the Brexit transition’s end. The housing secretary, Robert Jenrick, just confirmed the rental and sales market will still be open in tier-four areas across the south-east of England and London.

Nevertheless, there’s an increased warning by analysts that the pandemic caused economic fallout and the scaling back of the support of the government in 2021 will result in a short-term crash in the prices of houses. The economic forecaster of the treasury expects that the prices of houses will increase by over 8 percent in 2021 prior to staging a massive recovery next year.

According to the OBR, there’ll also be a hike in property transactions prior to the stamp duty holiday ending in March, as prospective purchasers rush so they can meet the deadline. There’s then expected to be a rapid drop in sales volumes, exacerbated by the rise in unemployment after the furlough scheme ends in April.

Nevertheless, according to Halifax, declines as high as 5 percent would only partially get rid of the average hike in house prices of 18000 euros pr 7.6 percent around 2019. They also said that a lot of first-time purchasers were able to afford the prices but became worse during the economic fallout from coronavirus that drove up inequality.

According to Galley, even though there’s been a very deep recession in centuries, the prices of houses rose last year at the fastest rate since 2016, and the approval of mortgages at the topmost level for more than a decade.

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