House prices soared in 2021, but have they peaked? Well, it’s hard to say for sure, but let’s consider what might happen with house prices for the rest of the year.
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What’s going on with house prices?
Despite the Covid-19 pandemic, house prices have increased by around 10% this year. Why? Well, there are several reasons for the surge, but mainly we can link the rise in house prices to three factors:
- Evolution of demand: The Covid-19 closures have caused an increase in demand for homes with gardens so more of us can enjoy the outdoors.
- Stamp duty holiday: Although stamp duty holiday ended in England on June 30, it has encouraged a wave of activity in the housing market.
- Low interest rates: When interest rates are low, as they are now, it can be cheaper to get a mortgage, which encourages more potential buyers to look for a new home. The result? Higher demand means higher house prices.
Where are the prices now, then? Right now they are at an all time high.
Will real estate prices drop in 2021?
Maybe, but as prices continue to rise, we are unlikely to see a significant drop in the next few weeks or even months.
- The interest rate is holding, which means we may continue to see a high number of buyers in the market.
- Although the stamp duty holiday has ended, buyers can still take advantage of reduced rates until September 30.
- There is a shortage of homes available right now which means there is more competition for properties. In a “seller’s market”, house prices generally remain high.
- Government programs such as Purchase Assistance encourage more first-time buyers to seek new accommodation.
Finally, we are still in the midst of the Covid-19 pandemic. As people continue to work from home and lifestyles change, we may see the demand for new properties with garden space continue. And as we come out of foreclosure, we may now see increased buyer confidence in the market more generally, which is encouraging property sales.
Should you buy a house in 2021?
Well, there is no clear answer to this question, as it is a purely personal decision.
Before buying a new home, there are many factors you need to consider, including whether you can afford a deposit and the required mortgage payments. So your decision shouldn’t be guided solely by house prices – you should carefully weigh the pros and cons before committing to a move.
If you are wondering if you want to buy a home this year, consider getting financial advice first. You can also try our mortgage calculator to help you determine how much you can afford.
What can we expect from house prices in 2021? There is a chance they will drop slightly, but we are unlikely to see a rapid drop in the next few months, especially if there is still a shortage of homes on the market.
If you are a potential buyer, remember that you should not rush the decision to move. It’s always best to shop around for the best mortgage deal possible. For sellers, again, don’t rush just to take advantage of market conditions. Consider whether moving now is financially the best option for you first.
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