2021 forecast: 4% price growth as housing priorities outweigh uncertainties
Rightmove forecasts a robust 4% national average house price growth in 2021 as there is strong evidence that people will continue to have their reprioritised housing needs high on their life agendas. The unexpected market momentum of 2020 overcame the unknowns of the pandemic and associated economic fallout, and though headwinds and uncertainties remain, demand for housing and buyer affordability appear to be strong enough to outweigh some of these dampening effects. Rightmove does however predict that the price rises will be at a slower pace than this year, which finished up by 6.6% (up by £19,920 to £319,945) despite a small monthly fall of 0.6% (-£2,080). The stamp duty holiday has undoubtedly added some extra momentum, but buyer demand was already very high prior to its announcement in July, and remains remarkably resilient at 53% higher than this time a year ago, despite the decreasing likelihood of completing a purchase by 31stMarch if it is agreed now. Having the biggest home-hunting audience in the UK, Rightmove has unique insight into future demand for property, and this, alongside other evidence, underpins our 2021 forecast of a 4% rise in the average price of property coming to market.
What does this mean for sellers in 2021?
The strong momentum from 2020 appears to be remaining fluid into 2021 and the momentum in the market activity projects that next year will be an active market in which to buy and sell.
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. Despite the clock ticking, around 130,000 sales were agreed over the last month, up by a remarkable 44% on the same period in 2019. A month ago we said that there were a massive 650,000 sales agreed and in the pipeline, many of which will be aiming for completion before 31st March to qualify for stamp duty savings. One month on, and a month closer to that deadline, the figure remains at around 650,000 because 130,000 additional sales have joined the processing logjam and replaced the 130,000 completions or fall-throughs that have taken place in the last month. Some completions are already projected to be delayed until April next year, especially where there are search delays, legal issues or complex mortgage applications.
It will be a slower second quarter once the stamp duty holiday is over, though even with the average price in Britain up by 6.6% this year, cheap mortgage rates that available for some leave scope for further modest price growth despite the loss of the tax saving. Indeed all regions have seen far greater average price increases than the average savings in stamp duty, indicating affordability headroom. 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.