12:02 PM, 14th December 2020, About 10 months ago
Rightmove has forecasted an average 4% house price growth in 2021. The unexpectedly high market momentum of 2020 despite the pandemic and its economic fallout continues, and although uncertainties remain, demand for housing and buyer affordability appear to be strong enough to outweigh deflationary pressures.
Rightmove is, however, predicting price rises to soften next year compared to 2020, which finished up by 6.6%. The stamp duty holiday and the end of the first lockdown boosted the market, but demand was already high prior to this, and remains remarkably resilient at 53% higher than this time a year ago, despite the decreasing likelihood of completing a purchase by 31st March if it is agreed now.
Tim Bannister, Rightmove’s Director of Property Data comments:
“2021 has a lot of variables, and so is not an easy one to call, but with Rightmove’s unique leading indicators of buyer and seller behaviour we are confident that the housing market will continue to outperform general expectations next year as it did this. Our 2021 forecast of a 4% price rise is more conservative than the unsustainable 6.6% national average seen this year. There’s likely to be a lull in quarter two unless the stamp duty holiday is extended, but for many buyers, its removal will not be make or break, though may lead them to reduce their offers to a degree to compensate for the higher tax, and indeed many sellers may be prepared to help to mitigate their buyer’s financial loss. First-time buyers will remain largely exempt, so in most cases will be no worse off. The maximum savings of £2,450 in Wales or £2,100 in Scotland are considerably less decisive than the £15,000 available in England for a house costing £500,000 or more, which does however only apply to a small part of the market.”
“Despite headwinds, ongoing demand still remains very high, indicating that there’s plenty of fuel left in the tank for the housing market. Interest rates remain at near-record lows, and we expect greater availability of low-deposit mortgages at competitive rates next year. These two factors will help to oil the wheels for home purchases by the ‘accidental savers’ who have collectively saved £100 billion that they couldn’t spend during the pandemic restrictions. With the expectation of a return to more normality in the second half of 2021 and a likely ‘fresh start’ mentality for some, there are sound reasons for continued positive market sentiment that will outweigh the economic, political, and health challenges ahead. Rural, countryside, and coastal demand will remain high for those re-appraising their lifestyle, but more normality will also help the recovery of those aspects of city-living that have seen a dip in their appeal.”
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