House prices predicted to fall in the new year
House prices in England and Wales are predicted to peak at an all-time high of £342,511 at Christmas, before falling in the new year.
That’s according to the latest forecast from moving services business, reallymoving. The firm captures the price buyers are planning to pay when they search for conveyancing quotes 12 weeks before they complete. This enables it to provide an accurate three-month house price forecast that it claims closely tracks the Land Registry’s Price Paid data.
The latest forecast noted that the summer surge in buyer activity continued through the early autumn, which means property price growth will remain positive through to Christmas. Based on deals already agreed between buyers and sellers during August and September, average house prices in England and Wales will increase by 1.1% in November and 1.5% in December, ending the year on £342,511.
But the housing market is already beginning to run out of steam as Lockdown 2 and concerns over rising unemployment undermine consumer confidence.
Price growth is forecast to dip into negative territory in the New Year, falling by 1.2% in January 2021, reflecting the slowdown in buyer demand seen in October.
A North/South divide is becoming apparent in the UK housing market, with the North East, North West, Yorkshire & Humber, Scotland and the East Midlands all set to see average prices fall over the next three months, according to the forecast.
However, London, the South East, South West, Wales, the East and the West Midlands are on course to see prices rise before falling in January, as they follow the North into a downward trend from the start of 2021.
Rob Houghton, CEO of reallymoving, said: “The New Year looks set to herald a change in fortunes for the housing market following an exceptional summer and early autumn which has pushed prices to record highs.
“But it was never sustainable. House prices cannot continue to defy macroeconomic influences such as rising unemployment, shrinking economic growth and the prospect of a No Deal Brexit at the end of the year.
“While we will continue to see positive growth through to Christmas based on deals already agreed, momentum is now slowing and we expect to see a reversal in the recent spike in house price growth over the first quarter of 2021.”