Are house prices going down?
The rates of Houses in the UK market have experienced a momentary boom after the lockdown. People were eager to move out, but now that the 'dust has settled' per se, have house prices gone down?
After almost four months of closure, property markets across the UK have reopened. Not only does this mean that people can move into new homes, but also that estate agents can resume normal operations. In-person viewings, buying and selling are now back on track. Data from HM Revenue and Customs (HMRC) shows that more than 70,000 properties alone were sold in the month of July. Compared to June of this same year, that's a 14.5 per cent increase.
Are house prices going down?
While it might be too early to tell whether the house prices have gone down, it's best to watch out for the next coming months. Time will tell whether the current figures are temporary or for long-term. As it stands, the current figures show that house prices have dropped, in comparison to the recent months.
Two property index have been compared to determine the most recent data. Rightmove's property index (based on asking price and not the price sold), reported a 0.2 per cent drop in August prices. On the other hand, Nationwide's July index which is based on mortgage lending revealed that there was a 1.7 per cent month-on-month increase in prices. Halifax's index reported a 1.6 per cent in increase.
With temporary cuts on stamp duty imposed by the government, buyers can potentially save a huge amount in taxes. Some experts compute that if a potential buy moved into their new home before April 2021, they could save up to £15,000 in tax. This stamp holiday was designed by the government to bring the market back to normal after the effects of the pandemic. HMRC believes the stamp duty cuts will most likely effect figures by early September. Rightmove was quick to add that sales are at the highest now than any other point in time in the last 10 years.
Experts believe the stamp duty holiday will help mid-range buyers in more expensive parts of England the most. The benefits of the holiday include savings. For example, a £400,000 property would save a buyer £10,000. A £500,000 property would yield a £15,000 in savings. These numbers have been encouraging many moves among buyers.
Despite this optimism and hope for the security of the market, many experts across the board still see a decline in the market this year. The predictions on house prices below are quoted from an article by Express.co.uk
"Knight Frank predicted a three per cent drop this year and a rise of five per cent in 2021.
Savills said prices could drop by up to 10 per cent this year before rising four-five per cent next year.
Lloyds Banking Group (which included Bank of Scotland and Halifax) said prices could fall by up to five per cent this year before recovering by two per cent in 2021.
Zoopla said a release of pent up demand could see prices rise by two-three per cent in the next quarter (three months) before dipping later in the year.
A Reuters poll of property experts predicted prices would fall by 5 per cent this year, before rising by 1.5 per cent in 2021 and 3.5 per cent in 2022.
In the short term, the stamp duty cut could make house prices rise, especially on properties in popular areas or within a commuting belt.
It goes without saying, buying a home based on the stamp duty holiday alone is a dangerous move. It would not be wise to pay a premium now and see the property drop in value over the next year. Research and meticulous study is the word from the wise. Get the best advice and guidance from experts that have your interest at heart.
