Kate says: We are now starting to see some forecasts for both prices and transactions coming through for 2021. Considering a few months ago property prices were predicted by Savills to fall by -7.5% this year, by the CEBR to fall by -14% and Bank of England by -16% during the pandemic, the new forecasts suggest we are in a lot better place than previously feared.
Prices in 2020 are now expected to rise by anything from 2-4%. Meanwhile, Savills are predicting 2021 prices will be flat, while PwC are predicting they will rise by around 1% in 2021, provided a vaccine is found during the year.
To be honest though, whether they rise much more than this doesn’t matter. The amazing reality is that in the face of the economic devastation that the pandemic has caused and will continue to cause into 2021, the property market hasn’t collapsed – despite almost everyone’s expectations to the contrary.
In the face of the economic devastation that the pandemic has caused and will continue to cause into 2021, the property market hasn’t collapsed – despite expectations to the contrary.
What I hope this indicates is that people’s attitude to buying and selling property has changed and changed for the good. This is the first year I can remember when people have rushed to buy property, despite the fact that prices were predicted to fall. However, it’s also the first year that people who had held off buying for several years had some ‘certainty’ over Brexit and who was going to be running the country, and of course the first time there has been a ‘stay at home’ order.
Making the right purchase
I think people have realised that they can’t ‘time their entry’ to the property market. I think (and hope) that they feel it’s more important to look at the monthly costs of buying and owning a property rather than the price you pay and believe that if you stay long enough in a property, you ‘should’ be fine. After all, mortgage rates are incredibly low and you can insure mortgage payments against sickness and loss of job. And as more people own their property outright and are therefore cash buyers, they appear less worried about price movements and more worried about putting the right roof over their heads.
Let’s hope for a steady year
Whatever happens in 2021, if the property market can have a steady year, with a good level of sales and little impact on property prices, this bodes well for the future. Of course, we all know not to say it’s the end of ‘boom and bust’, but perhaps the market will be less sensitive to price predictions and more focused on the cost of housing and that’s not such a bad thing.