Reallymoving, a price comparison website that runs an index based initially on conveyancing quote forms, says the New Year will herald a turning point for the housing market, with prices dropping 1.2 per cent in January and 2.5 per cent in February.
Based on analysis of purchase price data from 30,000 conveyancing quotes, the site says the average property price in England and Wales will peak at £352,239 this month – December – before falling to £343,312 by February 2021.
The site also says that looking back over the second half of this year, the proportion of first time buyers in the market fell by 12 per cent compared to the same period last year, as the post-lockdown boom was driven by equity-rich homeowners higher up the ladder benefitting the most from the stamp duty holiday.
This trend helped push up average prices in the second half of 2020, which the site says will lead to a correction when the stamp duty holiday ends and first time buyer activity rebounds.
The site’s chief executive, Rob Houghton, says: “The mask is beginning to slip on the two-tier housing market of recent months, which has seen activity from equity-rich homeowners who are less affected by the pandemic, concealing problems at the lower end of the market where first time buyers have benefited little from the stamp duty holiday and faced considerable challenges securing higher loan to value mortgages
“The kind of growth we’ve seen over the last few months was never sustainable.
“Despite positive vaccine news, which will certainly boost confidence that the end of the pandemic is now in sight, there are significant challenges for the housing market to overcome in the short term, including the end of both the stamp duty holiday and the furlough scheme on March 31, which is likely to result in further downward movement in prices over the first half of next year.”