Will house prices drop this year?

Published 15th of April, 2021

With house prices at record highs is a crash on the cards?

Many people are asking whether the next move for house prices is down? 

Should we be worried that as house prices continue to grow the chances of a house price crash get higher and higher, closer and nearer?

UK house price chart is a house price crash coming?

Credit not being crunched

The last house price correction was triggered by the ‘Credit-crunch’ when banks effectively stopped lending, this emergency stop in mortgage lending caused house prices to tumble. The latest indications from the Bank of England are that mortgage supply is increasing (it increased in Q1 2021 and is expected to increase again in Q2).

UK Mortgage approvals house price crash twindig

Mortgage rates at record lows

Mortgage rates are also at or around record lows and again the Bank of England’s outlook for mortgage rates is favourable. The conditions that triggered the credit crunch house price falls are therefore absent. The latest Bank of England Credit Conditions Survey reported that mortgage pricing relative to Bank Rate or the appropriate swap rate narrowed in Q1 2021 and is expected to narrow further in Q2 2021, which means all things other things being equal mortgage rates will continue to fall for a time yet

Average uk mortgage rates will house prices fall

Don't forget Stamp Duty is on holiday

The UK Housing market is also being bolstered by the Stamp Duty holiday which should underpin demand for homes for the rest of the Spring and throughout the coming summer. The spring and summer selling seasons will therefore be strong, but as the stamp duty holiday ends in September concerns about another cliff edge will start to be voiced and this may soften house prices in the autumn.

Is the Stamp Duty Holiday actually saving me any money?

Yes and No... 

Yes in that you have to pay less Stamp Duty during the Stamp Duty Holiday 

But no when you consider that across all areas of the UK house prices have increased by more than the stamp duty you can save since the strat of the Stamp Duty Holiday last year.

Whilst we can never say never the causes of the last house price crash are not currently close by and we

Housing Hailey

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