It is widely expected that house prices will begin to fall during the next three months as various factors come into play such as lockdown and the end of the stamp duty holiday. However, according to Reallymoving, the fall could be sharper than expected.
According to the home moving firm's latest analysis, the end of the popular government tax break on March 31st will cause residential property prices in England and Wales to fall by an average of 4.1% by April.
Reallymoving says that average prices will fall from January's high of £338,951 to £308,773 by April, due to thousands of property sales falling through.
The firm's three-month forecast, created by analysing conveyancing quotes given through their own comparison tool, is typically done 12 weeks before completion.
According to Reallymoving, any deals that fail to complete before March's deadline are likely to be renegotiated or have house prices split across the sales chain. The firm states that this will further impact prices, although this won’t become evident until Land Registry price paid data is published.
Regionally, they say the biggest falls in prices will be seen in the South West and the South East by April – at 11.7% and 10.9% in Yorkshire and the Humber. London is predicted to see prices drop by 5.4% within the same time frame.
Rob Houghton, CEO of Reallymoving, explains: “Now, for the first time, we can see the early impact of the end of the stamp duty holiday on prices, with buyers in January agreeing to pay less as they factor in the cost of a tax bill.
“Others who agreed deals earlier will still be hoping to make the deadline, and it’s likely we’ll see a sharp rise in fall- throughs in early April, as well as gazundering, which could impact final sale prices further if sellers are agreeable to spreading the cost – and many will be, rather than see their deal fall flat.
Rob concludes: “Transparency and openness are key, and rather than hoping for the best, practical buyers and sellers will be opening up conversations now to try and ensure they can still proceed if they fail to complete by 31st March.”