However, there is a large volume of transactions in the pipeline, with Bank of England data showing that mortgage approvals are at a 13-year high. This means “there may be enough residual strength” to sustain prices until March, said Mr Galley.
Buyers are rushing to transact before March 31 to take advantage of the stamp duty holiday announced in July. If buyers can complete before the spring, they will save up to £15,000 in tax.
Analysts have warned of a cliff edge in demand after the tax break ends, particularly as this will coincide with the switch to the new, less generous Help to Buy scheme, and the end of the furlough scheme in April.
George Franks, of Radstock Property, a London estate agent, said the market in December was “defined by the mad stampede of buyers to beat the stamp duty deadline”.
Buyers face enormous logistical delays as high demand combined with the pressures of working from home overwhelms the conveyancing process. Data company TwentyCi has forecast 325,000 buyers will not be able to transact in time to make the savings.
Miles Robinson, of online mortgage broker Trussle, said: “We must remain cautious of a potential dip in Spring as the stamp Duty holiday and furlough schemes come to an end and the impact of a third national lockdown unravels.”
But the promise of a vaccine has made others optimistic. Joshua Elash, of lender MT Finance, said: “The longer-term effects of the pandemic are yet to be borne out, but with vaccines being rolled out, and a Brexit deal on the table, we have a more positive outlook and now don’t expect that there will be a significant correction in house prices in 2021.”