Real estate firm Rightmove has projected a further climb in UK house prices in 2021 despite Brexit, the ongoing coronavirus pandemic and whether or not the government chooses to extend the current stamp duty holiday.
Asking prices rose almost 7% this year, but are expected to gain a further 4% over the next twelve months as the UK property market enjoys the continued trend in city goers moving to suburban and country locations to escape city infection rates.
Rightmove cited the pandemic as forcing Brits to reconsider their accommodation needs, after months of lockdown during the spring and again in the autumn drove up demand for larger properties with outdoor space.
It confirmed that while the stamp duty holiday introduced in July had added some extra momentum to the property market, demand was already strong before that – and remains ‘resilient’ even as the chances to capitalise on the holiday deadline in March quickly dwindle.
Nevertheless, there is still mounting concern amongst estate agents that 2021 could see a stall in sales enquiries as the government’s furlough scheme and the stamp duty holiday both draw to a close in the spring.
The New Year is expected to be a busy period for sales, however, as some 650,000 properties are still currently changing hands. Rightmove’s 2021 House Price Index report explained:
“It will be a busy start to 2021. The New Year is typically a time for resolutions for the year ahead, and many will see it as an opportunity to draw a line under 2020, which may well include a fresh start in a new home for those who have not already acted. Many have already done so since the English market re-opened in May, and many more are continuing to do so despite the seasonally quieter run-up to the Christmas period and the declining chance of completing a purchase before the stamp duty deadline”.
Rightmove CEO weighs in
Even with house sales expected to slow in the second quarter, Rightmove CEO Tim Bannister remains adamant that the property market has proved resilient through years of uncertainty, and states that the evidence suggests appetite to buy is still strong despite Covid-19 restrictions:
“Pandemic-related uncertainties have been around for nearly a year, and Brexit uncertainties for far longer, and record activity month after month has proved that movers are willing and able to act on their new or existing housing priorities. Demand has therefore exceeded supply in 2020 with the number of properties coming to market for the year to date down by 0.6% on the same period in 2019, and the number of sales agreed up by 8.3%. As a consequence the number of available properties for sale is at a record low, indicating scope for some further modest price increases overall in 2021 despite those uncertainties”.
“Despite these headwinds,” Bannister added, “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”.
Nick Leeming, Chairman of Jackson-Stops, commented:
“The start of the new year is traditionally a busy time in the housing market, with buyers and vendors alike taking the festive period to plan for the year ahead. However, we are expecting the first months of 2021 to be particularly active as buyers try to squeeze in their deals before March 31st. Those looking to make savings on the stamp duty holiday must act now, we are advising any serious house hunters to have their offers in by January latest.
“Buyers and vendors at the prime and super-prime end of the market will continue to move throughout 2021 due to a change in lifestyle aspirations which have been spurred on by the COVID-19 pandemic. Many of these clients will be entering the housing market for the first time in decades as they haven’t had a pressing need to move or buy a second home so have held off doing so until now. Whilst the introduction of a viable vaccine will act as a shot to the arm for the housing market, restoring confidence at every level, the return of SDLT will slow transactions down at the lower end of the market although the top end will remain resilient”.
Marc von Grundherr, Director of Benham and Reeves, also weighed in:
“We’re certainly seeing a sprint finish this year where the UK property market is concerned. This has been primarily driven by government stimulation in the form of the stamp duty holiday, protecting the market against the traditional air of lethargy that comes as we approach the Christmas period, and keeping it fighting fit both where transaction levels and price growth are concerned.
“We expect to see this tidal wave of market momentum spill over into next year and keep the market buoyant, as homebuyers race to cross the line before Rishi Sunak’s chequered flag falls on the chance of a stamp duty saving. While the end of this initiative will lead to an understandable drop in demand over the months that follow, it will be more a return to pre-pandemic normality rather than a dramatic market crash. This will be largely due to the firm foundations laid this year which should enable strong and consistent growth throughout 2021.”