UK house prices will rise 4% in 2021 as values continue to rise modestly after the end of the stamp duty holiday that has fuelled a mini-boom, Rightmove predicted.
Prices rose 6.6% in 2020 after Chancellor Rishi Sunak scrapped stamp duty on the first £500,000 of a property purchase, Rightmove said. Momentum tailed off in December when prices fell 0.6%, the property portal said.
The first quarter of 2021 will be busy as the 31 March deadline for the stamp duty break approaches, Rightmove said. Activity will slow after that date but low mortgage rates and people rethinking their housing needs will support further price growth, Rightmove predicted.
Buyers have raced to take advantage of Sunak’s stamp duty holiday though evidence suggests sellers were the main gainers as prices exceeded buyers’ savings. Prices were also driven up by a “race for space” as households looked for bigger properties, often outside cities, with the rise of working from home.
“There is strong evidence that people will continue to have their reprioritised housing needs high on their life agendas,” Tim Bannister, Rightmove’s property data director, said. “The unexpected market momentum of 2020 overcame the unknowns of the pandemic and associated economic fallout.”
Some commentators have warned the UK property market could go from boom to bust after stamp duty is restored and as the economy suffers from the Covid-19 crisis and the effects of Brexit. But Bannister said these uncertainties had failed to dent the ambitions of people seeking to reorder their living arrangements and that Covid-19 vaccines had raised hopes of an end to the pandemic.
“With the expectation of a return to more normality in the second half of 2021 and a likely ‘fresh start’ mentality for some, there are sound reasons for continued positive market sentiment that will outweigh the economic, political, and health challenges ahead,” he said.