Good news for vendors who are looking for a quick sale. According to Nationwide, UK house prices have seen the sharpest rise in nearly six years, making them 6.5% higher than a year ago. That means, right now, we are paying more to our clients for their homes so that they can move quickly.
The rapid rate in which house prices have risen has been driven by a culmination of factors, including pent up demand from the nationwide lockdown, which subsequently propelled people to seek a change in lifestyle or more space to work from home. In addition, the stamp duty holiday on properties priced up to £500,000 has encouraged many to make a move.
However, housing market activity is likely to slow next year once the stamp duty holiday expires at the end of March and the furlough extension comes to an end. In September, the Centre for Economics and Business Research (CEBR) predicted that there will be a massive slump in UK house prices in 2021, by nearly as much as 14 per cent.
In addition, there are a number of reports saying that basic costs for shopping and bills will go up following Brexit which will impact people’s ability to pay a bigger mortgage, therefore putting the brakes on the moving frenzy we have seen over the last few months.
The house price growth we have seen is simply not sustainable alongside macroeconomic influences such as shrinking economic growth, a possible ‘No Deal’ Brexit and most crucially, rising unemployment.
According to a report in the Independent, historically, rises in unemployment result in falls in house prices. For example, when unemployment in Britain rose during previous recessions, 1993 and 2008, house prices fell by 20 per cent on both occasions.
In the three months to August this year, the unemployment rate stood at 4.5 per cent. Although the housing market has, so far, appeared to buck against the trend of falling as unemployment rises, the true scale of unemployment is not yet being realised due to the furlough scheme. With huge retail stores such as Debenhams collapsing, unemployment is likely to rise sharply next year.
Savvy home movers will sell now at the height of the market and, if they can, wait to buy and see what happens next year because they may well get more for their money.
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