Fri. Oct 23rd, 2020

House price growth will stall across the UK next year as the share of first-time buyers in the market is forecast to decline.

Hamptons International made the predictions about property prices, while a separate report from Zoopla examined the share of first-time buyers in the market.

The property market has rebounded rapidly since the lockdown, according to the Hamptons, and expects prices to rise 2% for the full year.

Wales (3.0%), followed by London (2.5%), Yorkshire and Humber (2.5%) and the north west of England (2.5%) are expected to see the strongest growth in house prices in 2020.

The economic consequences of Covid-19 will be felt especially in 2021. By then there should have been some economic recovery.

Assuming a trade deal has been reached with the EU and a coronavirus vaccine will be available in the first half of next year without a full second lockdown, Hamptons expects house prices across the UK to remain unchanged in 2021 ($ 0) , 0%).

As the economy recovers, Hamptons expects UK house price growth to accelerate to 2.5% in 2022 and 3.5% in 2023.

Cheaper regions in northern England and Scotland could lead house price growth, it said.

Hamptons expects North East England prices to rise 4.0% in 2022, followed by Scotland at 3.5%.

The southern regions, where affordability remains low, will see the weakest price growth in 2022.

Aneisha Beveridge, Head of Research at Hamptons International, said: “The real challenges won’t be felt until 2021.

“The economic consequences of the recession triggered by Covid-19 will pull the real estate market off its long-term growth path.

“While some economic recovery should have taken place to cushion the withdrawal of government support, we still expect the real estate market to slow down over the next year.

“In line with a gradual economic recovery, we forecast a renewed spike in house prices in 2022 and 2023. The real estate market will fall in line with its historical cycle, with the northern regions expected to see the greatest price growth, further closing the gap in the South. “

Existing homeowners will overtake first-time buyers

The Hamptons forecast came out when a separate report from Zoopla predicted that existing homeowners with a mortgage are poised to overtake first-time buyers as the largest demographic in terms of revenue share.

It would be the first time since 2017 that homeowners with a mortgage have more first-time buyers in the market.

Zoopla calculated that first-time homeowners with a mortgage will make up about 33.9% of the market this year, while existing homeowners with a mortgage will make up about 35%.

The trend is expected to continue through 2021, with first-time buyers accounting for 32.2% of sales and homeowners on a 35.9% mortgage.

In 2019, first time home buyers with a mortgage accounted for 34.9% of sales, while homeowners with a mortgage accounted for 34%.

Richard Donnell, director of research and insight at Zoopla, said existing homeowners’ search for more space, sparked in many cases by the Covid-19 crisis, is fueling the trend.

Many low deposit mortgages have disappeared from the market in the past few months as lenders have become more cautious about “riskier” loans.

Mr Donnell said, “A change in the mix of buyers will help market conditions with continued demand from equity-rich existing owners looking for more space and relocation.

“In contrast, demand for first-time buyers is weakening. First-time buyers have been a driving force behind home sales over the past decade.

“They remain an important group of buyers, but reduced availability of higher mortgage lending value and increased movement by existing homeowners means a shift in the mix of home buyers by 2021.”

Property price forecasts for the next three years

Here are the projections for house price growth for 2020, 2021, 2022, and 2023, according to Hamptons International:

  • Greater London, 2.5%, minus 1.0%, 1.5%, 3.0%
  • Prime Central London, 1.0% minus 1.0%, 2.5% 4.0%
  • Southeast, 1.5%, 0.5%, 1.0%, 2.0%
  • East of England 1.0%, 1.0%, 1.5%, 2.5%
  • Southwest, 2.0%, minus 1.0%, 2.5%, 3.0%
  • East Midlands, 1.5%, minus 0.5%, 2.0%, 2.5%
  • West Midlands, 1.0%, minus 1.5%, 1.5%, 3.5%
  • Northeast, 1.5%, 1.0%, 4.0%, 5.0%
  • Northwest, 2.5%, 0.5%, 3.0%, 4.5%
  • Yorkshire and the Humber, 2.5%, 1.0%, 3.0%, 4.0%
  • Wales, 3.0%, 1.0%, 3.0%, 3.5%
  • Scotland, 1.5%, 0.0%, 3.5%, 5.0%


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By ashish

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