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House prices to dip as stamp-duty holiday ends

House prices will likely fall early next year when the stamp duty holiday ends and the furlough scheme winds down.

The Office for Budget Responsibility has said the current boom since the first lockdown will come to a close as the UK will see a spike in unemployment.

“House prices fell briefly as the pandemic struck, but recent indicators suggest they have subsequently recovered quite strongly,” said the Office for Budget Responsibility.

“This follows the easing of public health restrictions and the stamp duty holiday for residential property transactions that took effect on 8 July 2020. House prices are expected to fall back in 2021, driven by end of the stamp duty holiday and the hit to household incomes from the labour market adjustment that we assume will follow the end of the Coronavirus Job Retention Scheme.

“Despite a steady recovery from 2022 onwards, the level of house prices remains around 17 per cent lower at the forecast horizon compared to our March forecast,” it added.

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However, the housing boom is expected to continue into the first three months of 2021 before the stamp duty holiday and furlough scheme ends.

The property website Zoopla has estimated a further 100,000 houses to be sold in the first three months of next year. The number of new sales is currently 38% higher than it was a year ago.

Richard Donnell, director of research and insight at Zoopla, explained: “It has been a rollercoaster year for the housing market which is ending on a strong note with demand and sales agreed still more than 30% higher than this time last year.”

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