2021 has been a rollercoaster year for UK house prices already. With the imminent end of the stamp duty holiday causing an influx of buyers, can the market sustain its current trajectory? We take a look at the current house price forecast and what the experts really expect to happen this year.
What’s been happening in the housing market?
It is safe to say that the UK housing market is currently enjoying a price boom. The Land Registry, which works on a two-month lag, reported that house prices rose 10.2% year-on-year in March 2021.
For more up-to-date figures, Nationwide said that prices were up 10.9% year on year in May of this year. And provisional data from HMRC shows that 117,860 sales were completed in April.
A combination of the extension of the stamp duty holiday and homeowners looking for more space as a result of the pandemic has flooded the market with potential buyers.
Meanwhile, supply hasn’t really changed. There hasn’t been an influx of new properties coming onto the market, so as a result, prices have been driven up.
What’s the current house price forecast?
The current house price forecast for 2021 is optimistic. Savills has house prices rising by 4% for the remainder of the year.
Separately, Zoopla says that property transactions are predicted to exceed 1.5 million in 2021 – up 45% compared with 2020.
But there is still an element of uncertainty when it comes to house prices. While the stamp duty extension staved off any drop-off in the middle of the year, some are still concerned about what will happen when government support schemes end in the autumn.
While a recovering economy should support house price growth towards the end of the year, Covid-19 has a habit of throwing in a curveball now and then.
Basically, if things continue as they are in terms of the economy opening back up again, then the experts are fairly confident that we will continue to see rising house prices through to the end of the year. But if a new variant and more lockdowns derail this, then the housing market could feel the impact.
What about mortgages?
While the current house price forecast has things on the up, what is happening in the mortgage market?
Currently, you are in a better position if you have a big deposit. Interest rates are relatively low, although they are starting to climb once again. The good news is that they are still below pre-pandemic levels, so you could potentially secure yourself a good deal.
If you only have a 5% or 10% deposit, you may struggle a bit. It is largely these mortgages that have disappeared from the market during the pandemic. However, the introduction of the government’s new 95% mortgage guarantee scheme should mean that there are more options going forwards.
As with any financial product, it is always worth comparing mortgages in order to get the best deal for you. If you are interested in using a mortgage broker but don’t know how to find one, then sites like unbiased.co.uk can match you up with someone in your local area.
They will also be able to help you understand what type of mortgages could work for your situation. For example, is it best to fix a low rate for a period of time or track the Bank of England base rate for the next couple of years?
If you are looking for more detailed information, then check out our complete guide to mortgages.
