House prices are expected to fall next year after the market boom subsided after the lockdown, experts have warned.
The initial housing boom was fueled in part by pent-up demand from buyers as the nation emerged from the lockdown, various reports on the property market have suggested.
The tax cuts announced by Chancellor Rishi Sunak also led to increased demand.
However, online searches for the UK's major property websites have declined after their initial surge. Forecasters warn that this signals the end of the market upswing.
Google searches on major real estate websites have declined, as data from the online search engine shows, suggesting the UK housing market boom is about to break out
This home in Chipping Campden, Gloucstershire is listed for sale on the Rightmove property website for £ 1,450,000. However, if property prices fall, according to Pantheon Macroeconomics predictions, it will be worth £ 1,406,500
The Cotswolds house has original features such as exposed wood, stone walls, restored fireplaces, flagstone and oak floors
House prices for such properties are expected to fall in 2021 as the market boom subsides after an initial surge in demand
Real estate agents have seen an increase in people buying houses in villages and rural areas of the UK like this house in Gloucestershire
According to Google search data, the number of potential buyers visiting the top three real estate websites has decreased.
Analysis by Pantheon Macroeconomics showed that interest in key terms such as "Rightmove", "Zoopla" or "On The Market" slowed from a high in late August and fell by seven percent in September.
Samuel Tombs, chief economist for the UK firm at the analytics firm, said: & # 39; Online search data suggests the initial demand for larger homes caused by Covid-19 is now waning … recent gains in the House prices are unlikely to last.
Research by Rightmove shows an increase in buyer demand for homes in villages, with these rural hotspots seeing the largest increases in buyer searches
"We assume that the official price measurement will peak in October and be around three percent above the level before Covid in March and fall by three percent in the following twelve months."
House prices in the UK hit a record high in early September following the housing boom following the lockdown.
A report from Halifax earlier this month said home prices were 5.2% higher than the same month last year and property values were up 1.6% from the previous month.
According to the report, the price of the average UK home had risen to £ 245,747.
This five bedroom detached home is one of the properties for sale in the popular Lightwater, Surrey area where real estate agents have seen a surge in buyer demand after the lockdown
This property is on the market for £ 999,999 but when property prices fall as Google search data suggests it is worth £ 970,002
The Rightmove listing on this property says it was originally built in the Dutch style and converted into a family home in 1986
Lightwater in Surrey ranks third on the list of best rural areas where real estate agent Rightmove has seen a surge in buyer searches as people seek to move to the countryside and prioritize more space after the lockdown
House prices in the UK hit a record high in early September, but are expected to end in 2021 due to a number of factors including the end of the government's vacation program, which could affect the prices of properties like this one in Surrey
Around every eighth house sold in August cost more than the original price – the highest proportion in almost five years.
About 13% of properties sold last month have exceeded their original price. This was the highest percentage that the NAEA (National Association of Estate Agents) property mark has recorded since November 2015.
In July, 8% of the properties sold were above the offer price.
Houses also sell much faster than normal, with houses selling faster than apartments.
UK sales time decreased 31%, averaging just 27 days since lockdown, compared to 39 days in the same period in 2019, according to real estate agent Zoopla.
With prices dropping 3 percent from September highs of £ 245,747 next year, the decline could bring the average home owner's home value to £ 7,350.
Russell Galley, chief executive of Halifax, warned in her report that the price of inflation would fall once the impact of the pandemic on the job market was clear.
This seven bedroom detached house is for sale on the Rightmove property website in the village of Sturminster Newton, Dorset
The Rightmove listing states the property has a guide price of £ 925,000. However, if house prices fell 3.7 percent, such a property would be worth £ 897,250
The house for sale in Dorest is believed to date from the 16th century and still have original features such as wooden beams, which are pictured here in the property listing
The UK property market saw robust growth over the summer. Many properties like this Dorset house came on the market after the Chancellor's stamp duty cut, the Bank of England's extremely low interest rates, and a desire by some buyers to move to larger properties after the lockdown
The government's payment vacation for homeowners struggling to keep up with their mortgage bills ends at the end of next month. Buyers looking to buy new homes like this bolt hole in Dorset need to be aware of this
The robust summer growth brought about by the Chancellor's stamp duty cut on purchases under £ 500,000, the Bank of England's extremely low interest rates, and the desire of some buyers to move to larger properties after the lockdown would only go so far .
Mr Galley said: “The macroeconomic picture in the UK should clearer over the next few months as various government support measures end and the true extent of the impact of the pandemic on the labor market becomes clear.
"Rising house prices contrast with the negative impact of the pandemic on household incomes. With most economic commentators assuming unemployment will continue to rise, we expect more downward pressure on house prices in the medium term."
The end of the vacation program on October 31 is likely to trigger a wave of layoffs and job losses.
And despite further measures announced by the Chancellor to support the workplace as a substitute for vacation, the unemployment rate is expected to rise by up to 12 percent this year.
The government's payment vacation for homeowners struggling to keep up with their mortgage bills also ends late next month.
This three bedroom semi-detached house is listed on the Rightmove property website as for sale in Iver, Buckinghamshire. The newly built property is in a popular area that buyers are increasingly looking to relocate to
The property is asking for offers on the order of £ 750,000, but if property prices drop 3.7 percent after the post lockdown housing boom, it could be worth £ 727,500
Properties like this one in Iver want to capitalize on growing buyer demand. Around every eighth house sold in August cost more than the original asking price, making it the highest share in almost five years
Experts fear that the prices of houses like this one for sale in Buckinghamshire could be hit hard by rising unemployment. Job losses are likely to increase when the state vacation program ends in October
Another program slated to end next March is the stamp tax cut, which fueled the lockdown boom when it rose from a previous £ 120,000 to a threshold of £ 500,000.
The last time such a tax break was introduced was in 2008 when the vacation sparked a surge in property transactions that quickly plummeted as the offer ended.
The same downturn is forecast for the UK property market in another blow in 2021.
Neil Hudson, an analyst at BuiltPlace Consultancy, also expressed concern about Brexit.
He told the Financial Times, “We'll see the bad news show up.
“Redundancies among friends and families – when these things become real to people, we'll see the effects (on their willingness to buy real estate).
& # 39; Then the Brexit factor at the top. Will that creep back into people's minds? "
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