House prices UK: Have house prices gone down?

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Property markets across the UK have reopened after almost four months of closure. This means estate agents can once again conduct in-person viewings and buyers and sellers can get back on track. Provisional data from HM Revenue and Customs (HMRC) shows that more than 70,000 properties were sold throughout July this year – a 14.5 percent increase on June’s figures when lockdown was still in place.

Have house prices gone down?

As it stands, it is still too early to tell for definite whether or not house prices have gone down, something which will be revealed in the coming months.

However, current figures show that house prices have dropped in recent months.

RightMove’s property index, which is based on asking price rather than sold price, reported a 0.2 percent drop in prices in August.

Nationwide’s July index on the other hand, based on mortgage lending, reported a 1.7 percent month-on-month increase in prices, while Halifax reported a 1.6 percent increase.

The Government has also introduced temporary cuts to stamp duty, meaning buyers could potentially save up to £15,000 in tax if they move home before April 2021.

The cut is designed to bring the property market back to normal in the wake of the coronavirus pandemic.

HMRC says the stamp duty holiday is unlikely to impact on buying figures until late August or early September.

However, Rightmove says more sales are being agreed now than any other point in time in the last 10 years.

Mid range buyers in more expensive parts of England are likely to benefit the most from a stamp duty holiday.

Savings of £10,000 on a £400,000 property and £15,000 on a £500,000 property are encouraging more moves among buyers.

Despite the optimism of stamp duty and other measures taken to secure the market, experts across the board predict it will take quite a hit this year.

The predictions on house prices below were made before the Government announced its stamp duty cut.

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Knight Frank predicted a three percent drop this year and a rise of five percent in 2021.

Savills said prices could drop by up to 10 percent this year before rising four-five percent next year.

Lloyds Banking Group (which included Bank of Scotland and Halifax) said prices could fall by up to five percent this year before recovering by two percent in 2021.

Zoopla said a release of pent up demand could see prices rise by two-three percent in the next quarter (three months) before dipping later in the year.

A Reuters poll of property experts predicted prices would fall by 5 percent this year, before rising by 1.5 percent in 2021 and 3.5 percent in 2022.

In the short term, the stamp duty cut could make house prices rise, especially on properties in popular areas or within a commuting belt.

But, buying a home based on the stamp duty cut alone could be a dangerous move as you may have to pay premium now and then see your property’s value drop over the next year.

When considering how much to offer for the home, make sure to do your research and remember that estate agents work for the seller, so will be looking to get as much as they can.

If you are not 100 percent certain, consider taking advice from another agent or a specialist mortgage advisor.

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