Are house prices rising or falling?

TheĀ UK property market 2020-2021: booming or crashing?

The property market is always changing and there are a number of things that affect property prices year on year.

In short, the housing market is determined by the following factors:

  • Supply and demand
  • Interest rates
  • Real income
  • Demographic change
  • Property loans

In 2020, we have seen another large factor that has influenced a change in the housing market.

The Coronavirus pandemic has changed societies and countries around the world – but what exactly has it done to the property market? And what will happen in the next few years?

We take a look at this year’s housing market and project what this will mean for the next few years.

Most people expected COVID-19 and lockdown restrictions to cause a dip in the housing market, however, this was not the case.

In fact, there has been a 1.1% increase in house prices between 2019 and 2020.

After the easing of lockdown restrictions in the summer, many people brought forward their decision to move due to a number of factors:

  • First-time buyers moving out of their family home
  • Families moving out of the city
  • Families and couples downsizing to a more affordable property
  • Professionals upsizing in order to have the space to work from home
  • Credit conditions
  • Furlough, redundancy or affected income

As a result of the rise in house prices this year, first-time buyers are still struggling to get their feet on the housing ladder.

They are in no stronger a position this year than they were before COVID-19.

As a result of such an increase in house prices – a 2.5% increase in London – there may well be a dip in prices in 2021.

What does 2021 have in store?

This year’s increase in property prices has provoked forecasters and analysts to predict a fall of up to 20% due to the ongoing recession in the UK.

Though the Chancellor has announced a stamp duty holiday until March 2021, and house prices are forecast to fall, so will income, which means that first-time buyers, or commercial buyers will be more likely to opt for housing finance, loans or mortgages. Learn more here.

First-time buyers or those on a reduced income will fall behind, while those with money will take advantage, and this could lead to even more inequality and a larger gap in the access to housing.

How to know when to buy a house?

There are a number of things to do that can help you decipher when it is best for you to buy a house:

  • Research the market and do the mortgage maths
  • Organisation is key: budgeting and tracking your property search
  • Familiarise yourself with your debt-to-income ratio
  • Calculate whether you can afford the down payment
  • Know the interest rates
  • Consider the time of year. Find out more.
  • Think about the long-term.