The UK housing market is facing a potential shock in 2021, according to a recent report from Lloyds Bank. The report predicts that house prices could drop by as much as 7% in the coming year due to a combination of factors, including the economic fallout from the coronavirus pandemic and the end of the government’s stamp duty holiday.
The stamp duty holiday, which was introduced in July 2020, has been credited with helping to boost the UK housing market. However, with the holiday set to end on 31st March 2021, the report suggests that there could be a significant drop in house prices as buyers are no longer able to take advantage of the tax break.
The report also suggests that the economic fallout from the coronavirus pandemic could have a negative impact on house prices. With unemployment rising and consumer confidence low, many potential buyers may be unable to afford to purchase a property. This could lead to a decrease in demand for housing, which could lead to a drop in prices.
The report also suggests that the UK housing market could be further affected by the withdrawal of government support schemes, such as the furlough scheme and mortgage payment holidays. With these schemes coming to an end, many people may find themselves unable to keep up with their mortgage payments, leading to an increase in repossessions and further downward pressure on house prices.
Overall, Lloyds Bank’s report suggests that the UK housing market could be facing a significant drop in house prices in 2021 due to a combination of factors, including the end of the stamp duty holiday and the economic fallout from the coronavirus pandemic. It is important for potential buyers and sellers to be aware of this potential ‘mortgage shock’ and take steps to protect themselves financially.