House prices will keep climbing next year even if the economy is rocked by a jobs crisis, property website Zoopla is predicting.
Richard Donnell, Zoopla’s research and insight director, said prices could grow 4 per cent this year and are unlikely to drop in 2021.
He believes the property market will stay strong as wealthy people sell expensive city centre homes and move to the country.
Rise: Richard Donnell, Zoopla’s research and insight director, said prices could grow 4 per cent this year and are unlikely to drop in 2021
Prices will also be propped up for the first three months of next year by the stamp duty holiday and the extension of the Government’s furlough scheme until March.
Donnell said: ‘I don’t see prices falling year-on-year by the end of next year. I just think they are going to slow down.
‘By the end of this year UK house price growth will be 4 per cent, which could carry on rising into the first quarter of next year.
‘I don’t think we will see a lot of forced sellers next year and that limits the downwards pressure coming through on prices.
‘The rate of growth at the end of next year will be less than 4 or 5 per cent, but it will take quite a lot, and quite a dramatic change of circumstances, for house prices to go into negative territory at the end of next year.’
Chancellor Rishi Sunak last week extended the furlough scheme until the end of next March. Analysts had previously expected the housing market to falter when job losses picked up at the conclusion of the £47billion scheme.
But Donnell said the shifts in the housing market had been driven more by the changing lifestyles of homeowners than by the interventions of the Government.
He said large numbers of people were selling £1million properties in London and moving to homes worth about £600,000 in rural parts of the South of England. The shift will mean more cash buyers will be supporting house prices.
The largest banks have been pumping billions into the market to take advantage of a surge in demand. HSBC, Lloyds, Barclays and NatWest lent £3.9 billion, £3.5billion, £3.2billion and £6.7billion respectively between July and September. Lloyds, the largest mortgage lender in Britain, wrote £3.5billion in business during the whole of 2019.
‘It’s more than just the stamp duty stimulus,’ Donnell said. ‘The average homeowner moves every 20 years, and retired people with no mortgage move every 40 years.
‘If you lock up the nation for 50 days, they have a once-in-a-lifetime reassessment of what a home is really worth, and what you really want from your home.’
Zoopla’s data shows that the number of people expressing an interest in property is still 40 per cent higher year-on-year, even as the prospect of benefiting from the stamp duty cut dwindles.
James Reed, boss of Britain’s largest recruitment site Reed.com, said he was relieved when Sunak extended the furlough scheme.
‘I think it was an excellent decision,’ he said. ‘But we still have to recognise that by next March some people will have been on furlough for a year and the whole jobs market will have changed.
‘We need to make sure that people understand their job might not be available when they want to return, so it’s important they focus on learning new skills during this time.’