There is no doubt that demand cooled after the stamp duty discount was reduced. But a collapse in new listings has eclipsed the decline in new buyer demand, suggesting that prices will at least hold their ground in Q4 when stamp duty returns to normal. Moreover, with elevated household saving still supporting deposits, mortgage rates falling as competition between banks intensifies, and many households reassessing their homes in light of remote working we suspect demand will continue to surprise to the upside. Indeed, web search activity increased in September suggesting that the inevitable dip in transactions in Q4 will be short-lived. As a result, we expect house prices to rise by 10% y/y in Q4 2021 and by 5% in Q4 2022, above the consensus of 6% and 3.5% respectively.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services