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Will house prices drop in 2021?
According to the Halifax House Price Index, house prices fell last month for the first time since January. In June, the price of the average home was £260,358, compared to £261,642 in May, a drop of 0.5%. But the index suggests house prices were on average 8.8% higher in June than they were in the same month last year.
The strongest growth was seen in Wales, Northern Ireland and North West England.
However, the Nationwide House Price Index suggests an even greater jump – 13.4% over the same period, the largest annual rise in 16 years.
The dip in June recorded by Halifax coincided with the end of the full Stamp Duty holiday, which had seen the tax-free threshold on house purchases raised to £500,000. Step provisions are now in place until the end of September, with the tax-free threshold currently £250,000, reverting to £125,000 on 1 October, although help remains in place for first-time buyers.
UK house prices forecast
A shortage of supply has been one of the major factors driving prices skyward, with prospective purchasers fighting over homes as soon as they came on the market in a bid to beat the June deadline. But as we head through July, supply remains low, which coupled with the low cost of borrowing and continued high demand for larger family homes, is likely to buoy house prices over the coming months.
Halifax’s managing director, Russell Galley, said “The average price of a detached home has risen faster than any other property type over the past 12 months, up by more than 10% or almost £47,000 in cash terms. At a cost of over half a million pounds, they are now £200,000 more expensive than the typical semi-detached house. That power of home movers to drive the market, as people look to find properties with more space, spurred on by increased time spent at home during the pandemic, won’t fade entirely as the economy recovers.”