Abstract
▀ The unexpected resilience of house prices last year sets 2021 up to be another year of rising values. But unsupportive macro factors and the end of the stamp duty holiday lead us to suspect some correction may not be long in coming. ▀ Insulating the housing market in 2020 was massive fiscal aid and Covid's economic pain falling disproportionately on non‐homeowners. Measures announced in March's Budget should boost housing demand in the short term. ▀ But higher unemployment, falling household incomes, and inaction at the BoE present contrary forces. We see prices falling 4%‐5% in 2022, although risks look skewed towards a smaller correction in values than a larger one.
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