The UK housing market has proved to be resilient once more in the face of uncertainty. As it did in the beginning moments of Brexit, the market proved to still be an attractive draw and remained fluid during a global pandemic. While house prices have surprised experts and have unexpectedly shown strong growth in some areas, there are valid reasons why home buyers are showing up.

The Covid-19 pandemic has pushed people to spend more time at home, especially with lockdowns. Not only are people spending less time outside their home to socialize, but they are working from home, children are going to school and studying at home, and entertainment is being found at home. People are moving to take up residence in properties that better suit their pandemic lifestyle and thus the housing market has been getting unexpected attention.

Experts also give credit to the fact that lenders are offering better mortgage products. There are low interest rates making borrowing cheaper and home buyers can push their money into higher value home buying deals. In addition, the government issued a stamp duty holiday until the end of March 2021. The absence of any property purchasing tax up to a specific level of home purchase offers even more savings. 

Halifax has issued a forecast that the end of the stamp duty will slow down home purchases and house prices will therefore fall by up to 5% next year. 

More unemployment due to the impact of the pandemic will also contribute to the slowdown.

Russell Galley, the managing director with Halifax, remarked, “While the economy should begin to recover in 2021, helped by the roll-out of Covid vaccines, the jobs market will inevitably adjust to the changes in demand that are occurring, and unemployment is expected to rise. With the stamp duty holiday also due to expire in March, and lower levels of demand, housing market activity is likely to slow.”

The forecast by Halifax may prove to be a warning not to home buyers, as much as the government capable of implementing programs to help keep the housing market busy when it most needs to be to support a faltering economy. Perhaps the stamp duty holiday will end up being extended and other creative opportunities will occur to keep less optimistic forecasts from becoming the reality in 2021.