House prices are likely to fall once the stamp duty holiday ends and the furlough scheme ends early next year.
The Office for Budget Responsibility said the current economic boom since the first lockdown will come to an end as unemployment rates soar in the UK.
“Although house prices briefly fell due to the onset of the pandemic, recent indicators suggest that they have since recovered fairly strongly,” the Office for Budget Responsibility said.
“This follows the easing of public health restrictions and the stamp duty holiday for residential property transactions that came into effect on 8 July 2020. is expected to decline in 2021 due to expected labor market adjustments following the end of the coronavirus job retention scheme.
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“Despite a steady recovery from 2022 onwards, the level of house prices remains approximately 17% lower over the forecast period compared to the March forecast,” it added.
However, the housing boom is expected to continue into the first three months of 2021, until the stamp duty holiday and furlough scheme end.
Real estate website Zoopla estimates that an additional 100,000 homes will be sold in the first three months of next year. New sales are now up 38% compared to a year ago.
Richard Donnell, Director of Research and Insights at Zoopla, said: “This year has been a roller coaster for the housing market, but it ended strongly with demand and sales still up more than 30% compared to this time last year. It’s happening,” he explained.
