Housing market set for New Year ‘correction’

The New Year could be a turning point for the housing market, with house prices falling by -1.2% in January and -2.5% in February, warned Reallymoving.

In its House Price Forecast, the home moving company predicted average house prices to reach £352,239 before they start to fall.

Rob Houghton, chief executive of reallymoving, said: “Our prediction of a New Year change in fortunes for the housing market has been further strengthened by the latest data which clearly shows price growth entering a downward trend in January and accelerating in February.

“The mask is beginning to slip on the two-tier housing market of recent months, which has seen activity from equity-rich homeowners who are less affected by the pandemic, concealing problems at the lower end of the market where first-time buyers have benefited little from the stamp duty holiday and faced considerable challenges securing higher loan to value mortgages.

“The kind of growth we’ve seen over the last few months was never sustainable. Despite positive vaccine news, which will certainly boost confidence that the end of the pandemic is now in sight, there are significant challenges for the housing market to overcome in the short term, including the end of both the stamp duty holiday and the furlough scheme on 31st March, which is likely to result in further downward movement in prices over the first half of next year.”

The proportion of first-time buyers fell by 12% in the last six months, compared to the corresponding period in 2019.