Is The Housing Market About To Crash?
The end of 2020 saw houses prices rise at the fastest annual rate in nearly six years. Not only was the entire year unprecedented, but the boom in property sales was too. No one anticipated that 2020 would see house prices soar, but this boom can only last so long. There is much speculation around a property market crash in 2021, with many experts preparing for a drop.
We’re looking at the likelihood of a property market crash, and how experts expect the market to change in the coming months.
Why Did Lockdown Cause A Property Boom?
The unusual situation we all found ourselves in at the beginning of 2020, turned out to be the perfect concoction for the property market. The government went to great lengths to protect incomes and minimise the financial damage to individuals.
Because of this, many homeowners saw their incomes replaced or preserved. While at the same time, their living expenses took a dramatic drop, with less commuting, socialising and entertaining than ever before. Alongside this, restrictions have been forcing people to spend all their time stuck at home. This brings to light any issues people have with their current properties and makes them re-evaluate what they want from their home.
Those who previously prioritised travel links and city centres have been switching to rural living and more space.
Are We Heading For A Property Market Crash?
Fears of a property market crash are coming from experts who believe the market is quickly running out of steam. All the measures the government have put in place will soon be taken away. The stamp duty holiday is to set to end in the coming months. Furlough will finish and inevitably result in many being left unemployed.
The ban on repossessing homes from tenants will end, and so fed-up landlords will look to sell. A combination of all these things could easily result in a property market crash.
The most common reason for a property market crash is because of an overall decline in the economy. As homeowners lose their jobs or have a drop in income, they can no longer make mortgage payments and so will have no choice but to sell quickly. Pressure sales like this can drive down house prices and result in a property market crash.
Is Anything Predictable Anymore?
Despite this, we are still not in ordinary times. What would usually lead to a property market crash could easily play out differently this year. We know that the government is keen to minimise the impact the pandemic has on the economy, and there are beliefs that they will further extend schemes.
Not only that, but banks are being more patient than ever. This is because they don’t want to come across as though they are cashing in on the crisis. Mortgage lenders are using the government’s mortgage holiday programme to help their customers stay afloat. Many homeowners have also been able to build on their savings over the past year.
This combination of government support, bank pragmatism and increased savings could prevent many homeowners from being forced to sell. So, even though a property market crash is a possibility, it is more likely that, instead, house prices will level out in 2021.
In addition to this article, please do read Why a good estate agent is essential.