Will house prices continue to grow in 2021?
- Credit: SARAH LUCY BROWN
A growth in house prices in Suffolk is predicted to slow down in 2021 - despite estate agents seeing their busiest ever year in 2020 "against all expectations".
Sellers say that Suffolk's bumper year was driven by the government's decision not to charge stamp duty on properties below £500,000 — a move which could save buyers up to £15,000 — and people choosing to relocate to the countryside.
According to property website Zoopla, these factors underpinned prices rising at an average of £27.62 per day throughout 2020 for properties in the East of England.
Tom Orford, head of the residential property team at Savills Ipswich, said: "Against all expectations, 2020 was an exceptionally busy year – especially at the higher end of the market.
"The pandemic has encouraged people to think more about the space they live in and the attributes they most value in a home and there was clear demand from buyers which is still very much in evidence as we head into the new year.
“Lifestyle relocation remains a big theme and people continue to reassess their work-life balance.
"Indeed, the most recent lockdown – rather than cause a pause in the market – appears to have only reaffirmed people’s desire to move, particularly if they have one eye on beating the stamp duty deadline of March 31.
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"Buyers continue to want somewhere with greater space and access to the countryside and coast."
Tim Dansie, director at Jackson-Stops, said: "It was the busiest and probably one of the most extraordinary years that we can remember.
"From March 23 to May 12, when everything was in proper lockdown, we weren't allowed to do anything.
"So it became busy because all that time — which is normally one of our busiest times — was condensed into the rest of the year and it then ran right through to the autumn."
But, Mr Dansie said he thought the impending stamp duty deadline on March 31 is playing on some buyers' minds and could cause a slowdown in the market.
"At the end of the day, the stamp duty deadline is going to disappoint a lot of people because they're not going to get it through in time," he said.
"I've got one deal in particular that if it doesn't happen by March 31, then it may not happen.
"I don't think we're in bubble territory, but I think there will be some deals that will be knocked on the head if they aren't done by March 31."
Oliver Johnson, partner at Clarke & Simpson, said: "I think there'll be huge pressure on the chancellor to continue with the stamp duty holiday.
"I perceive the building industry continuing to be a cornerstone of this economy. And I think they'll want to continue to see the property market generally continue to trade and the stamp duty incentive has been very helpful in doing that.
"The PLC housebuilders, among others, will be putting the government under a lot of pressure to make sure that we don't see enquiries fall away in April.
"It's got to come to an end at some point. But it's an important mechanism to keep the housing market moving at the moment and to end it at the end of March, I think would be premature."
Mr Orford said: "Despite the background of economic uncertainty, we expect levels of activity to remain strong into the spring.
"Changes in buyer behaviour, less exposure to an anticipated spike in unemployment and the roll out of a vaccine should all continue to support the market here in Suffolk in the short term.
“However, we are expecting this to be offset by the withdrawal of the stamp duty holiday.
"In the same way that this has provided the greatest financial boost to buyers since its introduction, our researchers also think it is likely to have the biggest dampening effect over the remainder of the year.
"What happens after that will also depend on the extent to which the economic recovery has gained a foothold.
“As a consequence our research team expects the regional market to remain price sensitive during 2021 – with very little if any house growth in the next 12 months.
"However, the longer-term forecasts are more encouraging, with prices expected to increase over the five year period from 2020 until 2024.”