2021 Housing Market Predictions

2021 Housing Market Predictions When the Coronavirus pandemic occurred in March 2020, there was widespread panic across all sectors, with millions of individuals suddenly forced to work from home or on furlough, as well as bewilderment and worry over how the country and the rest of the globe would be affected. Now, about a year later, we're still suffering from the impacts of the virus and have learned to adjust in order to be able to move forward, but for homeowners, the burning issue remains: what are the housing market predictions for 2021.

What was the state of the housing market in 2020?

In the initial shutdown, the property market came to a grinding halt, causing considerable concern among homeowners because it meant that any intentions to buy or sell were put on hold, with no indication as to when the market would be allowed to reopen. After seven weeks, the government granted the green light for the real estate market to reopen under strict guidelines, with the manner in which we buy and sell drastically transformed.

The development of virtual viewings, which allow potential buyers to see a house through a video tour, has resulted from homeowners being able to move forward with their sales again as a result of these new restrictions. This has reduced contact between potential buyers and reduced the risk of

spreading the virus across multiple house viewings. More information on them can be found in our article, How are house viewings becoming more virtual?

It was only a matter of time until experts cautioned homeowners about the ramifications of the lockdown in the property market and their fears of house values decreasing by the end of 2020, and all we could do was wait and watch what the after-effects were.

Why did house prices not plummet as precipitously as predicted?

The estimates were varied, with some experts predicting losses in property value of as much as 20%, but so yet, we haven't witnessed anything close to this extreme.

One of the primary reasons the housing market was able to recover in the manner in which it did following the shutdown was the stamp duty holiday, which was declared in July 2020 and will last for one year. This stamp duty holiday allowed buyers to save up to £15,000 on their purchase, enticing those who were considering selling a house in Nassau County and moving on or taking their first step onto the housing ladder in the following several years to act quickly. The implications of the stamp duty adjustments for me were discussed in greater depth in our article What are the stamp duty changes?

This increased mobility in the market contributed to maintaining prices high since there was enough activity to keep houses selling and being purchased to mitigate some of the damage that would have occurred following the 7-week halt.

Will prices remain stable for the time being?

Having managed to maintain stability as we approached 2021, when the more severe declines were predicted to occur, some homeowners are optimistic that we have avoided these losses and that their home value will be alright especially with the tiny increase in house prices in November 2020.

However, in the coming months, two major factors that have contributed to the stability of house prices will begin to change, which could tip the scales and cause house values to begin to decline – the end of the stamp duty holiday and the end of the furlough scheme – which could cause house values to begin to decline.

The stamp duty holiday has encouraged thousands of homeowners to move forward with their purchases and has helped to keep the property market

stable; however, after the holiday ends, it is projected that the housing market will begin to slow. This will be followed by the elimination of the furlough plan, which will have a detrimental impact across all industries because it is assisting millions of people across the country with their income.

Why would the conclusion of these events have such a significant impact on the property market?

The end of the stamp duty holiday will almost certainly result in a decrease in the number of people buying and selling – those who were planning to buy and sell in the next year or so did everything they could to bring their plans forward so that they could take advantage of the tax break while it was available. A house is one of the most significant purchases that we make, and it is not something that most people do on a regular basis. As a result, the number of people looking to buy a house is likely to decrease in the future as the majority of those who are interested in moving have already done so or are in the process of doing so.

Aside from all of this, with the end of the furlough plan, many people's finances will be tighter than they have ever been, making large expenditures such as real estate the last thing on their thoughts. Several times, the furlough has been extended; nevertheless, the government has not announced any additional extensions for the deadline that is approaching in April.

What will be the extent of the decline in housing prices?

Experts are now predicting a 5 percent decline in the value of real estate, with the possibility of a lesser drop depending on how the economy responds to the third lockdown, which does not have an end date as of yet. House prices are difficult to anticipate, and as we saw last year, they can resist a great deal of pressure. However, with the support that has been holding prices steady coming to an end, it is largely expected that price declines will begin to occur in the near future.