"Considering the wider economic context of the post-lockdown property market boom, it was never a matter of if it would end, but when."
Reallymoving says that the summer and early autumn housing market boom is "unsustainable and it is now entering a period of readjustment".
Reallymoving captures the purchase price buyers have agreed to pay when they search for conveyancing quotes through the comparison site, typically 12 weeks before they complete, enabling it to provide a three-month house price forecast.
The firm says price falls are likely to attract more first-time buyers to the market later in the spring who may have held off as prices rose over the last few months, particularly if lenders continue to warm towards higher LTVs loans and ease restrictions around gifted deposits.
Additionally, once the stamp duty holiday has ended it expects the pressure on conveyancers, surveyors and removals firms to ease, "alleviating congestion in the system and bringing more reliability to the home moving process".
Rob Houghton, CEO of Reallymoving, commented: “Considering the wider economic context of the post-lockdown property market boom, it was never a matter of if it would end, but when. In the second half of 2020 buyers faced stiff competition for homes, forcing them to pay more and in many cases wiping out the stamp duty saving, but already this year we’re seeing demand falling to more normal levels and prices heading back down again. The extent of the decline depends on the length of the current lockdown and the Chancellor’s generosity in mitigating its impact, the speed of the vaccine roll out and the subsequent economic recovery. The market is yet to be truly tested by the end of the furlough scheme and mortgage payment holidays, both of which are currently masking job losses and distressed property sales.
“As we head towards the end of the stamp duty holiday on 31st March sellers should prepare for an increase in gazundering, where buyers reduce their offer just prior to exchange. A large number of deals will be hinged on an assumed stamp duty saving and if they fail to complete in time, buyers will suddenly need to find a significant amount of cash – or renegotiate the price.
“It’s not all bad news though, with a Brexit deal finally agreed that brings to an end four years of uncertainty, and positive action from lenders to reintroduce high loan to value mortgages and overturn bans on gifted deposits. Combined with declining prices and the end of the stamp duty holiday, we could see favourable conditions for First Time Buyers to make a return to the market later this year.”
