Business & Investment

How much did home prices actually rise in 2020? And what about 2021?

The real estate market in 2020 is on a roller coaster. They soared at the cost of lower prices, mainly due to the press of the pause button and the reduction in stamp duty.

Potential buyers and sellers provide some difficult data to stick with in all speculation, as the predictions about what the pandemic will do to real estate values ​​have proved wrong. I turned my attention to the price index.

The release of the final index of the year highlights what really happened to home prices throughout the year.

UK home prices rose this year despite the uncertainty brought about by Covid-19

In both cases, prices have risen significantly compared to 2019 as the market has recovered significantly since the first blockade.

Traditionally the most bullish on the market, Halifax says prices have risen 7.6% in the year to November to reach £ 253,243.

It reported similarly high 7.3% growth nationwide (fastest in six years), stating that average real estate prices in December were £ 11,000 higher than at the start of the pandemic.

At the other end of the scale, the real estate website Zoopla recorded a 3.9% growth and a high of £ 222,900.

The National Bureau of Statistics, which obtains data from completed sales rather than mortgage-listed or approved properties like other indexes, showed the highest growth of 5.4% since October 2016, with average prices record highs. Recorded £ 245,000.

However, this applies to the year to the end of October, not November, as it is slightly behind the other indexes.

The average of these numbers, along with Rightmove data, suggests that a typical UK home is now worth about £ 254,402-or 6 percent more than it was a year ago.

That’s about £ 15,000 more for all indexes and the maximum amount you can save in a £ 500,000 home on your current stamp duty holidays.

Except for the northeast, all regions of England are now above their pre-recession peak in 2007.

House prices rise in 2020: index comparison
index Latest annual price increase in 2020 (%) Latest Average UK Home Prices Annual price increase expected in 2021 (%)
Halifax 7.6 £ 253,243 – 2 to – 5
Nationwide 7.3 £ 230,920 – –
Light move
(Numerical value based on the asking price)
6.6 £ 319,945 +4
ONS 5.4 £ 245,000 – –
Zoopla 3.9 £ 222,900 +1

Prices have ups and downs, but most have risen

When it comes to home prices, there were some important moments in 2020.

This year “Boris bounce” when asking for a price, Vendors boosted by a conservative victory in the December 2019 general election.

This was supported by rising selling prices, like Zoopla. Pointed out a 3.6 percent increase In January.

However, this confidence seemed short-lived and predicted that prices would be maintained nationwide. “Almost flat” Throughout the year.

Then Covid came.Analysts initially estimated that home prices could fall by 20%, and Rightmove’s home price index was raised when the UK was blocked and the home market closed. Become meaningless..

According to ONS, the average cost of housing in the UK now reaches £ 245,000.

According to ONS, the average cost of housing in the UK now reaches £ 245,000.

What happened next was a surprise to many. According to most indicators, prices fell month-on-month from late spring to early summer, but remained higher than in 2019.

For example, in April, Halifax reported home prices. Still, 2.7% year-on-year growth..

Then, in June, Zoopla was priced by the reopening of the housing market and the resulting stagnation of demand. Return to pre-Covid level..

Later, Rishi Sunak added fuel to the fire with the announcement of a stamp duty holiday for homes worth up to £ 500,000.

The average asking price in July reached a record high of £ 320,265. This is 2.4% higher than before the March pandemic, and Rightmove said: “Mini boom” This is due to a 75% surge in inquiries from buyers.

Properties with gardens and home offices were at the top of their wish list as the blockade caused people to reassess their housing priorities.

Contrary to expectations from the beginning of the year, real estate prices began to rise thereafter, with some indexes reporting record highs throughout the fall.

The· Latest ONS numbers The average UK home price has been shown to be £ 245,000 (up 5.4% or £ 13,000) for the year to October, but according to national indexes, home prices are 6.5% increase to £ 229,721 In the year until November.

Home Price Winners and Losers

New data from Halifax reveals the regions where home prices saw the largest rises and falls in 2021.

Islington In North London, the largest real estate prices rose by an average of 13.4%, or £ 85,918. Leeds It saw an 11.3 percent increase (or £ 25,024), making it second in the Halifax table. in the meantime, Croydon Third place is up 10.9% to £ 39,117.

On the other side of the scale, home prices are Paisley, Scotland was cooled at 1.7% or £ 2,448.The cost of buying a popular home Hack knee London’s area is £ 9,843, or 1.5% cheaper, making it the second largest fall in the UK.

Even in London Merton And Greenwich House prices fell 0.6% and 0.2%, respectively, and experienced the fifth and sixth largest declines.

What will happen in 2021?

Despite ending the year at record highs, many still believe that house prices cannot continue to rise.

Halifax said the outlook for 2021 looks weak and prices are expected to fall by 2% to 5%, but admitted that “the uncertainty of this year’s forecast is much higher than usual.”

According to experts, the rise in home prices could slow down in 2021.

According to experts, the rise in home prices could slow down in 2021.

In particular, housing market experts are concerned that activity may decline after the stamp duty holiday ends on March 31, 2021 and wage support schemes such as furloughs begin to shrink. I am.

Lucian Cook, Head of Housing Research at Savills, said: ‘Stamp duty holidays seem to be significantly smaller than the price increases since their introduction, with an average purchase price savings of only 1%.

‘[But] The aftermath of the stamp duty holiday is expected to calm the housing market activity. This is especially true among potential buyers who rely on savings for sufficient capital to obtain a competitive mortgage.

Expected to settle housing market activity in the aftermath of stamp duty holidays

Zoopla predicts that house price increases will reach 5% in February, but will slow to 1% by the end of the year.

The boost provided by the stamp duty discount is “second only to the essential desire for a higher quality living space, exacerbated by the global epidemic,” with 10% deposit mortgage availability. Said that the rise in mortgages would support first-time buyers.

Richard Donnel, Director of Research and Insights, said: [the second half of the year]..

“Overall, we expect the number of completed housing transactions to be comparable to the 2020 level of 1.1 million.”

Rightmove went against this trend, but predicts a 4% increase in asking prices in 2021 as housing priorities “remain high on the challenges of people’s lives.”

Why are the indexes so different?

The reason the home price index is different is that it takes data from different sources and analyzes it in different ways at different points in the sales process.

Official statistics

There are two sources of home price data from the government: National Bureau of Statistics UK Home Price Index And HMRC transaction data..

The UK HPI uses data from the land registry to register sales only after the purchase is complete. This means it’s a very accurate way to look at changes in home prices over time, but there is a time dilation. For example, the sales included in the November index are probably agreed in September.

ONS figures show that home price growth hit a four-year high in October 2020.

ONS figures show that home price growth hit a four-year high in October 2020.

As data is added, the numbers will change over time. This doesn’t have much of an impact on heading statistics, but it can have a significant impact on your data if you drill down to a specific location.

Another way to measure the temperature of the real estate market is to look at HMRC’s transaction data.

This is a monthly estimate of residential and non-residential real estate sales based on property tax transactions such as stamp duty payments. However, this does not cover home prices.

Mortgage approval data

There are two home price indexes based on mortgage data: Halifax and nationwide. Halifax uses mortgage approval data, while nationwide tracking properties after the survey.

This means that it reflects market trends more quickly than a completion-based index.

Both identify “typical” or “standardized” homes based on some characteristics and track price fluctuations in those homes up and down.

Mortgage approval data can show changes faster than government statistics

Mortgage approval data can show changes faster than government statistics

The number that comes out depends to some extent on the type of property the bank offers a mortgage.

However, to eliminate this bias, we use a process called “mix adjustment”. For example, if Nationwide’s data was biased towards southeastern housing, it would have made more loans there, and the mix adjustment would somehow proceed towards that night.

Halifax has been collecting home price data since 1983 and nationwide since 1991.

Rightmove and Zoopla

Real estate websites Rightmove and Zoopla also have their own way of tracking home prices.

Unlike other indexes, Rightmove monitors the selling price, not the selling price, and draws data from about 95% of the homes currently on the market.

This makes it a reliable indicator of the seller. If the asking price rises, it generally indicates that there are many buyers interested in the market.

However, it can be distorted depending on the property type. For example, if the number of one-bedroom apartments for sale in a particular area surges, the average asking price will drop without reflecting actual emotional changes.

Zoopla’s Home Price Index is based on repeat sales. That is, it tracks the long-standing sales of the same property. Extract data from data on sales prices at completion, mortgage valuations, and agreed sales.

This eliminates property type discrepancies, but it may not necessarily be useful when checking prices in a small area, as it may reflect only a handful of recent sales.

Seasonally adjusted

The index adjusts the data to even out the discrepancies based on the season. Therefore, the value of “seasonally adjusted” may be displayed.

This is because winter is a popular time to move home, so prices tend to rise less in winter and higher in summer.

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How much did home prices actually rise in 2020? And what about 2021? How much did home prices actually rise in 2020? And what about 2021?

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