In November 2020, I was asked a series of questions about prospects for our housing market in the near future. The questions and my responses are below:

1. Are house prices expected to fall? If so, when?

It is difficult to lump all houses into one homogenous group and to make a generalised prediction which covers all.

Prime London house prices are set to rise once the coronavirus vaccine becomes widely available and we can begin to get back to a “normal” life of international travel with no quarantining requirements. Many international travellers who would normally have spent time in London during 2020, have not been coming to London.  Many of these potential property buyers still see London as a desirable place to own property both as a store of wealth but also as an alternative to expensive/impersonal hotels for their 2/3 months of visits to London in any given year.

Suburban house prices are set to rise as buyers from Central London leave the city seeking more space, gardens and terraces.

Outside of the M25, house prices in more desirable towns and villages have already risen in the order of 15/20% recently as demand for work from home space and larger plots spiked.   Moving out of London decisions were rationalised largely on the basis that commuting into the office on a daily basis may no longer be a requirement of living in the Country.

Countrywide and beyond the Home Counties, house prices will mirror the availability of good mortgage finance deals and the employment rate.

If unemployment rates rise and old jobs are not replaced by new opportunities, you could see house prices begin to fall through 2021.

In London though the picture is different and in the main, there are plenty of jobs and not enough good houses to satisfy the demand to buy rather than rent.

It is largely preferable to own your own home, pay down your own mortgage rather than rent someone else’s house and pay down their mortgage, provided you can borrow the money to do so.

To generalise, unless we see a massive rise in unemployment and a shrinking of the mortgage market, house prices will at the very least be stable.

Once coronavirus and Brexit are behind us and provided our economy in the UK continues to grow, house prices will inevitably continue their historic upward trend.

2. What will the end of the stamp duty holiday do to prices?

The end of the stamp duty holiday will marginally soften asking prices to reflect the additional costs of moving house.

Once these additional costs are absorbed the wider housing market will settle down to normal patterns of growth reflecting the UK economy.

3. Can we expect a property crash?

You might expect property crash if the UK economy tips into a serious and prolonged recession and it becomes more difficult to find reasonably priced mortgage finance.

If unemployment rises dramatically after the Furlough scheme finishes, this will inevitably affect the property market.

4. Is now the right time to buy or sell? Or should you wait? If so, for how long?

It is the right time to buy if you have had enough of the private rented sector and want to own your own home and pay down your own mortgage.

I have been asked so many times when is the best time to buy and I always give the same answer which is “last year”.

It is the right time to sell if you need a larger property and one becomes affordable in the area that you want to live.

It would be difficult for me to recommend selling your main home to use the money for alternative investment reasons as you would be losing money every month that you rent a home in the private rented sector.

Again, you either own or rent your main home.  With historical trends of house price growth, owning a property is comparable to running very disciplined savings account for the typical 25-year term of your mortgage.

5. Is now the right time to buy a house?

Yes. It is always a good time to buy a house if you find the right property and negotiate a sensible purchase price to reflect where we are in the economic cycle.

To Summarise:  The house market in the UK is a continual source of fascination for current owners of UK property and those considering getting on the ladder or making a property investment. Concerns about prospects for house price growth are always there but are inevitably heightened during periods of economic stress such as we have seen in 2020.  Brexit, Covid, Furlough schemes coming to an end, stamp duty holidays and the list goes on. Someone somewhere is always speculating about how these factors might influence house prices.

When asked for a prediction, I always fall back on property market fundamentals. What is happening to the national unemployment rate. What is the availability of reasonably priced mortgage finance? Where are house prices in relation to incomes?  Is the UK and attractive environment for international buyers.  Are these international buyers  looking favourably at prospects for the UK economy?  Does the UK still provide some of the best educational facilities in the world for the children of international buyers?  Are we building  Central London developments which meet international high standards and satisfy demand fro international buyers?

Fundamentally, I believe it is better to own a property than to rent one. As an international visitor, I would rather own a beautiful Central London apartment than stay in an expensive impersonal hotel.

The UK economy will settle down post covid and post Brexit. Prospects for long term economic growth are strong. For me then, working with an experienced and knowledgable property finder and buying a well-priced property in London will always work out well provided you take a long term view (8/10 years). Speculating on London property in the short term is more challenging with all the associated costs of buying here. For most of my clients, you can add 15% to any purchase price to cover your costs of buying in prime London. As a buyer, this means that prices need to rise by at least 15% before you have any prospect of selling for a profit.  Provided you are realistic about this, I believe that 2021 will be as good a year as any to make a purchase.