House prices are expected to rise at the end of this year before falling in a number of English regions in 2021 as the impact of the coronavirus pandemic hits the economy.
The Hamptons International Housing Market report predicts an overall rise of 2.0% across the UK for 2020, with the biggest increases in Wales (3.0%), London (2.5%), Yorkshire and the Humber (2.5%) and the North West (2.5%).
But as the Covid-19 crisis takes its toll on the country’s economy, the market is expected to stall over the next 12 months.
The overall UK market is predicted to remain flat next year at 0.0% – but only If there is an EU trade deal, a vaccine becomes available in the first half of next year and there is no major second lockdown, indicating a further decline is possible.
Aneisha Beveridge, head of research at Hamptons International, said: “The real challenges won’t be felt until 2021.
“The economic consequences from the Covid-19- induced recession will pull the housing market from its long-term growth trajectory.
“While some economic recovery should have taken place to cushion the withdrawal of government support, we still expect the housing market to slow next year.”
Ms Beveridge said the market has been “buoyed” in 2020 by pent-up demand going back to 2016 and a stamp duty holiday.
As the economy recovers, however, house price growth could accelerate overall across the UK to 2.5% in 2022 and 3.5% in 2023, according to the report, equating to 8.0% over the next four years.
The more affordable regions in the North of England and Scotland that have lagged behind over the last decade are forecast to lead on price growth, with rises in the North East expected to increase by 11.5% by the end of 2023.
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Ms Beveridge added: “The housing market will fall back in line with its historical cycle, with Northern regions expected to see the greatest price growth, further closing the gap with those in the South.”
Meanwhile, rents are expected to underperform house prices this year with -1.0% falls forecast in the UK, followed by a further -1.0% fall in 2021 before rebounding.