UK house prices have suffered their biggest drop since April 2020, according to the Halifax building society.
In January 2021, average prices fell 0.3% month-on-month, leaving an average house price of £252,000. It marks the end of seven-month upwards momentum for house prices, starting in May last year after April saw a drop of 0.6% as the nation reacted to the early days of the pandemic.
Russell Galley, Managing Director of Halifax, says:
“There are some early signs that the upturn in the housing market could be running out of steam. How far and how deep any slowdown proves to be is a challenge to predict, given the prevailing uncertainty created by the pandemic. With swathes of the economy still shuttered, and joblessness continuing to edge higher, on the surface, this points to slower market activity and downward price pressures in the near-term.”
Despite a year of such unpredictable ups and downs, and despite this recent drop in prices, average values are still roughly £13,000 higher than they were this time last year.
“Industry figures for agreed sales remain well above pre-pandemic levels but new instructions to sell have decreased noticeably,” Galley said. “And total stock held by estate agents has risen to its highest level since before the EU referendum in 2016.”
Stamp Duty Holiday
Many people will now point to the looming stamp duty holiday deadline and say it is the cause for dropping prices. People no longer believe they’re going to be able to complete a home purchase before the deadline expires and are therefore dropping out of the market. Less demand always equals lower prices.
If this prediction comes to fruition, by the month of April 2021 values could drop significantly as hundreds of buyers flee the market. However, our own research suggests that very few buyers are actually being motivated by the tax relief and that the stamp duty deadline will have no effect on their desire to move. Time will tell.