House price drop 'inevitable' but plunging city prices could lead to surge in second homes
HOUSE PRICES in the UK will "inevitably" drop according to several experts. However, the a plunge in prices in city could lead to new opportunities for second homes.
By MILLIE BULL
House prices have remained fairly buoyant this year, despite the property market coming to a standstill earlier this year due to the coronavirus pandemic. The tail-end of this year has seen prices skyrocket to record highs, with more people looking to take advantage of the stamp duty land tax (SDLT) holiday. The holiday is due to come to an end at the end of March which could see demand for homes and prices drop off.
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Express.co.uk spoke exclusively to several experts in the field about house prices in 2021.
Product technical manager at the mortgage broker John Charcol Nick Morrey revealed that he thinks the coronavirus vaccine will have a positive effect on the market as it could allow people to return to “normality”.
He said he’s expecting that to be around the Easter period as it will take a while for the vaccine to fully roll out across the nation.
However, he also said it will take a while for Britons’ confidence to return after the vaccine.
He explained: “I still think people will be a little bit reticent.
“They’ll hold back but confidence will start to return with regards to just having a normal life.”
House prices: The tail-end of this year has seen prices skyrocket to record highs (Image: GETTY)
The mortgage expert also said he thinks Britons will continue to leave the city in favour of the suburbs.
He added: “People won’t forget this [pandemic] particularly quickly but I think the move of people moving out of cities and going to live in less densely populated areas will continue for a couple of years.
“The only thing is of course is that the prices in the cities I believe are not exactly rising.
“Whereas prices outside the city are rising.
“So there comes a stage where people say it isn’t worth while moving outside the city.”
But it’s not all bad news for the cities as a unique opportunity could arise from in the form of second homes or “pied-à-terres”.
“There is an opportunity with city prices dropping slightly for people to get pied-à-terres,” he explained.
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“So they think ‘right we’ll sell our £2.5million property in London and buy a £1.5million property in the country and a £900,000 flat in central London so we’ve got a pied-a-terre if we want to use it so we can come to the theatre and go to posh restaurants.’”
He added: “But I think the migration from cities to less densely populated areas will continue for the next couple of years but it won’t last forever.”
Meanwhile, The Property Twins, Tonya Barnard and Rea Hill from Chelmsford, Essex believe a price drop next year is “inevitable”.
The property and garden experts said the SDLT holiday cutting off in March will have a detrimental impact on transactions.
They explained to Express.co.uk: “I think it’s inevitable that house prices will drop.
“I just think that if the SDLT holiday cuts off as sharply as it’s supposed to in March I don’t think all the transactions will quite make it to the finishing line.
“So if that’s the case I think a lot of chains will break and it will be detrimental to the current transactions.”
Rea, who works alongside her husband for gardening company Rose Hill Design & Build Ltd and Tonya, who works as head of lettings at Adrians in Chelmsford, both believe the stamp duty holiday has encouraged people to push forward their moving dates to this year.
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Most affordable places to buy UK (Image: EXPRESS)
The property duo described this year as being “crazy” with people wishing to get deals through.
They added: “If you’re selling you’re thinking ‘great I’m going to get a top price for my property this year’.
“And if you’re buying, you’re benefitting from the stamp duty cut.”
However, they think next year could look a little different.
“Next year I think that excitement and rush will obviously be gone,” they explained.
“That will probably mean there’s a slight dip in the demand and maybe the house prices will suffer a little bit because of that. But we’re hoping not too much.”