As the coronavirus crisis hammered almost every sector and plunged the UK economy into its deepest recession, the housing market, which came to a complete halt during the lockdown, managed to bloom after reopening in May, according to Hamptons International Housing Market Forecasts (HIHMF).
The latest data for September indicates that the property market has remained buoyant, with the average home selling for a record high of 99% of its initial asking price.
Hamptons expect house prices in the UK to rise 2.0% in 2020, up from 0.9% in 2019. It predicts a 3% rise in Wales followed by a 2.5% increase in London, home prices in Yorkshire and the Humber and the North West are also expected to rise by 2.5%, with the latter expected to see the strongest house price growth in 2020.
But, there is less optimism going into the new year as many economic deadlines, such as Britain’s departure from Europe on 31 December loom. COVID-19 fallout is also likely to disrupt the housing market’s upward trajectory.
Meanwhile, the research suggests that the second quarter of 2021 could see a fall in house prices, assuming that the stamp duty holiday ends in March.
It forecasts the UK housing market and economy to make some gains and stabilise by the end of 2021. With prices expected to remain flat if the availability of mortgage finance returns to near pre-COVID levels.
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The regions with the most job losses where affordability barriers are already tight will see a small price fall. The West Midlands — the area with the highest furlough take-up rate at the peak — is set to see a -1.5% fall in 2021 — the biggest price decline. London is expected to see a -1.0% falls, while the East Midlands could see a -0.5% drop. Meanwhile the remaining six regions will see prices rise between 0.0% and 1.0%.
For 2022 and 2023 Hamptons predicts the housing market to go back to its “longer-term growth path” with property prices expected to increase across all regions by 2.5% and 3.5% respectively. The rise is predicted to be in line with household incomes and is supported by low interest rates.
With the greatest price growth expected to come from areas where affordability barriers are not a big issue, Hamptons says these are “typically from the regions where prices have lagged behind.”
Prices in the North East are expected to rise by 4% in 2022, with those in Scotland by 3.5%.
Southern regions, where many people can’t afford to buy a home, will see the weakest price growth in 2022.
Over the four-year period, the West Midlands is expected to record the weakest house price growth, due to the impact of the coronavirus crisis on the local economy, with