Analysts have predicted that UK house prices will continue to fall by 5% this year and are unlikely to recover those losses until the end of 2022.
Buyers are thought to be nervous about big purchases such as house buying as the coronavirus pandemic has hit people’s personal finances.
The 5% decrease is a conservative estimate with some experts warning a worst-case scenario could see a drop of up to 11%. This would be great news for those first-time buyers who are looking to get on the property ladder, although not for those who are about to sell.
However, prices are forecast to rise by 1.5% in 2021 and 3.5% in 2022 with London set to have the strongest recovery in the UK.
Before the coronavirus pandemic was at its worst, UK house prices were forecast to rise 2% this year and 2.8% in 2021. And although it seems the pandemic has hindered the housing market, there are some disagreements on the accuracy of the forecasts.
Andrew Brigden at Fathom Consulting said: “Housing market activity is unlikely to return to normal levels until it is clear that the worst of the Covid-19 crisis is behind us.”
While Marc von Grundherr, director of Benham and Reeves, had a more optimistic outlook: “A five percent fall in house prices over the next six months is highly unlikely given the sharp return in market activity seen over the last few months.”
“Even in the face of a market lockdown and pandemic uncertainty, UK house prices have edged up on an annual basis and while month-to-month movement has shown large declines in places, such a short-term measure is far too erratic to base any long-term health predictions on.”
The effects of the coronavirus pandemic on the housing market
The housing market has been in flux recently due to the coronavirus pandemic with many banks pulling their best deals off the market as caution took hold. Another effect was that remortgage applications have risen dramatically by 110% year on year as people tried to raise capital or pay off debts as personal finances took a hit.
As mortgage brokers in Manchester, we’ve been helping people find the very best deals on the market. With remortgage applications increasing, it’s a good idea to act sooner rather than later as remortgaging can take time and lenders will be extremely busy. Contact us today for help.