Brexit deal and vaccine vital for stable market – forecast
The first leading agency to make a 2021 forecast says the market should be stable next year – so long as there’s a trade deal with the EU and a speedy end to the pandemic.
“Assuming a trade deal is agreed with the EU and a vaccine becomes available in the first half of next year, with no major second lockdown, we expect prices in Great Britain to remain flat in 2021” predicts Hamptons International.
The agency say 2021 will be challenging thanks to health and economic uncertainties.
“Although the wind down of government support measures means that unemployment is likely to peak in H1 2021, the economy should have made up some lost ground. We also assume that a trade deal is agreed with the EU at the turn of the year and a vaccine becomes available in the first half of 2021” the agency continues.
It says there may be small price falls in the second quarter but as 2021 progresses there should be more stability.
“Providing the availability of mortgage finance returns to near pre-Covid levels, we expect house prices to remain flat in Great Britain in 2021, with small price falls in those regions likely to see the biggest job losses and where affordability barriers are already tight” according to Hamptons.
The West Midlands, the region that had the highest furlough take-up rate at the peak, is set to see the biggest price falls next year – down 1.5 per cent. London and the East Midlands will also see falls of 1.0 per cent or less.
Most other regions will have small rises.
Meanwhile transactions in Great Britain will reach one million this year, 1.1m in 2021 and then a higher level in 2022.
“The real challenges won’t be felt until 2021. The economic consequences from the Covid-19- induced recession will pull the housing market from its long-term growth trajectory. While some economic recovery should have taken place to cushion the withdrawal of government support, we still expect the housing market to slow next year” anticipates Aneisha Beveridge, head of research at Hamptons International
“In line with a gradual economic recovery, we forecast house prices to rise again in 2022 and 2023. The housing market will fall back in line with its historical cycle, with Northern regions expected to see the greatest price growth, further closing the gap with those in the South.”