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Unemployment and economic downturn to push house prices down next year, brokers say

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  • 06/11/2020
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Unemployment and economic downturn to push house prices down next year, brokers say
House prices could drop by three per cent in 2021, a survey of brokers have said.

 

The three per cent decline recorded by Smart Money People was the average of the responses of the survey. When asked what the scale of change in house prices could be, the answers of the 490 mortgage brokers questioned varied between a 40 per cent decline while more optimistic responses predicted a 25 per cent rise. 

Overall, the study of 490 mortgage brokers found 80 per cent expected property prices to decline or stall by the final quarter of next year. 

Rising unemployment levels and a recession are perceived to be the biggest threat for the housing market next year, as half of brokers said this would negatively affect prices over the following 12 months 

The brokers believed these circumstances would be a consequence of the pandemic, as 47 per cent cited the coronavirus as a reason for falling house prices. 

Other brokers felt wider changes in the market would cause a decline, with 49 per cent naming the end of the stamp duty holiday and changes to the Help to Buy scheme as reasons for any downward trends.   

Brexit was perceived to be the lesser threat among brokers as just 13 per cent expected it to influence prices. 

Jacqueline Dewey, CEO of Smart Money People, said: “House prices this year have continued to grow at a rate that many would have found surprising when the impact of coronavirus was first seen in March. 

However, it’s clear from many brokers that the stamp duty holiday has created a spike in demand as many people try to complete their housing transactions before it is scheduled to end in March 2021.  

It will be interesting to see whether their predictions are correct when we consider that the recession could deepen next year, she added. 

 

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