UK property and housing market forecast for 2021

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Investment News
4 Jan 2021
3 min read
Blog
Investment News

UK property and housing market forecast for 2021

4 Jan 2021
3 min read
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The promise of a New Year traditionally marks the beginning of a new chapter – whether it is a resolution or a long-term plan for a better future. If investing in UK property to generate an additional income is a part of your plans, Town Square Invest has put together a property forecast for 2021, to help guide investors to the right opportunities.

What happened to the UK property market in 2020?

To plan for future purchases, it is important to take a moment to reflect on how the UK property market performed throughout 2020.

With the Covid-19 pandemic and the looming Brexit deadline, the UK’s housing market has had much to contend with. However, these obstacles have, in their way, helped to illustrate the resilience of the tangible nature of bricks and mortar.

We recently discussed the impact of the second lockdown on the UK’s property market, where we saw property prices increased at their highest rate in 6 years.

Echoing this trend, the latest data from highstreet lender the Halifax has shown that UK property prices increased by 7.6% throughout 2020, with the average property up from £239,927 at the start of the year to reach £253,243. This marks the fastest five-month gain since 2004.  

Despite its challenges, the UK’s property market has remained buoyant throughout 2020, and the pace of transactions is likely to continue into 2021, partly due to the upcoming Stamp Duty holiday deadline.

 What is the outlook for the UK property market in 2021?

Estate agent Jackson-Stops forecast that UK property prices will increase by 2% over 2021, with locations in London’s commuter belt set to see a boost in activity as city works look towards lifestyle changes post-lockdown.

Jackson-Stops is equally optimistic about the UK’s rental market in 2021 and predicts the amount paid by tenants in the private sector will ‘steadily rise’ throughout the year.  

It is also worth noting that the price paid by tenants in private rental property in the UK up by 1.4% in the 12 months to November 2020 (Office for National Statistics).

With so much uncertainty throughout 2020, there is speculation that house prices could go down, however, initiatives that include a Stamp Duty holiday, record-low interest rates, and incentives for first-time buyers, have helped property prices to increase over the last 12 months.

This trend is likely to continue in 2021 and it is important to remember that unlike the first spring lockdown – when estate agents, viewings, moving home, and completing on properties were all brought to a halt – the UK property market remains open, even in Tier 4 restrictions.

Will house prices go up in the next 5 years?

 Back in September, Savills updated its 5-year forecast to reflect the effect of Covid-19 on the property market. 

Those keeping a close eye on UK property market trends will be interested to know that Savills revised up its outlook for mainstream property prices for 2021 and beyond.

Savills expects that house prices will go up over the next 5 years by 20.4% across the UK, as the economy improves and low interest rates support affordability.

Commenting on the report, Lucian Cook, Savills head of residential research said: “While we clearly can’t ignore the economic backdrop, other factors, including a stamp duty holiday, have unleashed an unexpected wave of activity in the market and added to the pent-up demand coming out of lockdown.

“Many people are reassessing their work-life balance, seeking a change of location or a trade up the ladder. The unexpected stamp duty holiday has given a further boost to the market particularly in higher value locations through the commuter zone and lifestyle relocation hotspots.” For the full outlook, click here…

UK housing market predictions for 2021

For a long time, the UK has been seen as a safe haven for property investors and with optimism from industry experts, continued demand from buyers and renters, and government initiatives to keep transactions moving, we expect the housing market to offer investors good value for money and reliable returns throughout 2021.

Investors should consider opportunities in UK property hotspots such as London commuter belt towns like Brentwood, plus locations that have a proven demand from tenants such as Manchester, Liverpool, Lancashire, and Leeds.

Are you considering investing in UK property in 2021? Contact the experts at Town Square Invest to discuss your plans and we will match our opportunities to meet your requirements.