Average price tag on a home has jumped by nearly £20,000 in 2020
The property market is ending 2020 on a “sprint finish”, with the average price tag on a home nearly £20,000 higher than it was at the start of the year, despite the economic fallout from the coronavirus crisis.
Across Britain, the average asking price on a home stood at £319,945 in December, 0.6% down month-on-month but a 6.6% increase compared with the same month in 2019, Rightmove said.
In cash terms, the average house price is up by £19,920 compared with a year ago.
Rightmove predicts house prices will increase by 4% nationally across 2021.
It expects the first quarter of next year to be busy as a stamp duty holiday deadline approaches on March 31.
Rightmove estimates that a “log jam” of around 650,000 properties are currently changing hands – a total which is unchanged on last month.
It said the second quarter of 2021 is expected to be slower, but continued low mortgage rates will help to support sales.
Rightmove said the stamp duty holiday has boosted momentum, but buyer demand was already very high before the cut was announced in July, and remains 53% higher than this time a year ago.
Tim Bannister, Rightmove’s director of property data, said: “We are confident that the housing market will continue to outperform general expectations next year as it did this.
“Our 2021 forecast of a 4% price rise is more conservative than the unsustainable 6.6% national average seen this year.
“There’s likely to be a lull in quarter two unless the stamp duty holiday is extended, but for many buyers its removal will not be make or break, though may lead them to reduce their offers to a degree to compensate for the higher tax, and indeed many sellers may be prepared to help to mitigate their buyer’s financial loss.”
Many lenders pulled low-deposit mortgages off the market at the start of the coronavirus crisis, but in recent weeks there have been some signs of lenders expanding access to 10% deposit deals once more.
Mr Bannister said: “Despite these headwinds, ongoing demand still remains very high, indicating that there’s plenty of fuel left in the tank for the housing market. Interest rates remain at near-record lows, and we expect greater availability of low-deposit mortgages at competitive rates next year.
“These two factors will help to oil the wheels for home purchases by the ‘accidental savers’ who have collectively saved £100 billion that they couldn’t spend during the pandemic restrictions.
“With the expectation of a return to more normality in the second half of 2021 and a likely ‘fresh start’ mentality for some, there are sound reasons for continued positive market sentiment that will outweigh the economic, political, and health challenges ahead.”
Nick Leeming, chairman of Jackson-Stops, said: “We are expecting the first months of 2021 to be particularly active as buyers try to squeeze in their deals before March 31.
“Those looking to make savings on the stamp duty holiday must act now, we are advising any serious house hunters to have their offers in by January latest.
“Buyers and vendors at the prime and super-prime end of the market will continue to move throughout 2021 due to a change in lifestyle aspirations which have been spurred on by the Covid-19 pandemic. Many of these clients will be entering the housing market for the first time in decades as they haven’t had a pressing need to move or buy a second home so have held off doing so until now.”
Marc von Grundherr, director of Benham and Reeves, said: “We’re certainly seeing a sprint finish this year where the UK property market is concerned.
“This has been primarily driven by Government stimulation in the form of the stamp duty holiday, protecting the market against the traditional air of lethargy that comes as we approach the Christmas period, and keeping it fighting fit both where transaction levels and price growth are concerned.
“We expect to see this tidal wave of market momentum spill over into next year and keep the market buoyant, as homebuyers race to cross the line before (Chancellor) Rishi Sunak’s chequered flag falls on the chance of a stamp duty saving.
“While the end of this initiative will lead to an understandable drop in demand over the months that follow, it will be more a return to pre-pandemic normality rather than a dramatic market crash. This will be largely due to the firm foundations laid this year which should enable strong and consistent growth throughout 2021.”