Our latest research for the H2 2020 Mortgage Lender Benchmark has found that over 80% of brokers believe house prices will stagnate or decrease by the end of next year.

We asked mortgage brokers whether they thought house prices in 12 months would change, the scale of any change and their reasons. Responses to changes in house prices ranged from a very pessimistic -40% to an optimistic +25%. The average of all brokers we surveyed resulted in an expectation of prices decreasing by 3%.

Jacqueline Dewey, CEO of Smart Money People, commented, “House prices this year have continued to grow at a rate that many would have found surprising when the impact of coronavirus was first seen in March. However, it’s clear from many brokers that the stamp duty holiday has created a spike in demand as many people try to complete their housing transactions before it is scheduled to end in March 2021. It will be interesting to see whether their predictions are correct when we consider that the recession could deepen next year.”

Over 51% of brokers we asked believed that increased levels of unemployment and a general economic downturn would be the cause of a house price reduction or stagnation, likely to be as a result of the pandemic this year. Unsurprisingly, coronavirus was cited by more than 47% of brokers as a reason for house prices not increasing into 2021.

Over 49% of brokers believed that the end of the stamp duty holiday and an end to the help to buy equity loan scheme, both scheduled to end in March 2021 would cause house prices to go down or flatten by the end of next year. Our report shows that many of the more pessimistic brokers felt that the stamp duty holiday has contributed to a house price ‘bubble’ and felt that overall prices would even out once the scheme ended. Several brokers even claimed the end to the stamp duty holiday would cause an “arctic winter”.

What are brokers actually saying?

One broker, who believed house prices would fall by as much as 10% in 12 months’ time, justified the downturn by saying: “Estate agents have taken the stamp duty holiday as an excuse to increase house prices. Speaking with a local FRICS Surveyor he is of the opinion that housing stock is at least 8-10% over priced at present and that will almost certainly re-adjust following the Government’s seeming desire for a 'crash out' Brexit and re-introduction of stamp duty.”

Another broker, who predicted a more cautious 5% drop in prices commented: “It’s a bubble with the stamp duty incentive, more unemployment [is] on the way, lenders will be more cautious.”

Of less concern to brokers was Brexit, which only 13% of brokers noted as having an impact on house prices.

The findings are part of Smart Money People’s bi-annual Mortgage Lender Benchmark report , which asks brokers for feedback on mortgage lenders they’ve placed cases with recently, as well as their thoughts on the mortgage market in general. The full report will be released in December 2020.

To pre-order your copy of our H2 2020 Mortgage Lender Benchmark report contact us using [email protected]

About the Mortgage Lender Benchmark:

The Mortgage Lender Benchmark report, is a bi-annual report released by Smart Money People in June and December each year. 

  • The report captured 494 brokers feedback. Mortgage brokers were asked to leave feedback on the last five lenders they’ve attempted to place a case with recently, as well as other providers they use within their mortgage business, and their comments on the mortgage market in general.
  • The data capture period was October 2020.
  • 77 lender’s data was captured as part of the study