House prices are forecast to keep on climbing next year in spite of Brexit, the Covid crisis and whether or not the Government extends the stamp duty holiday. Rightmove predicts that 2021 will still see an increase in UK property prices by as much as 4%. This year, despite being in the midst of a pandemic, property prices increased by almost 7%.
The pandemic has seen an increase in people purchasing properties that are more ‘Covid-friendly’ whether it be in the form of additional rooms to turn one into a working from home office (with Rightmove stating listings with office workspace in a property description seeing a 320% increase in interest), or a place with more onsite amenities and outdoor space. It’s this that has spurred on the property market to achieve some of the record-breaking figures we’ve seen this year.
The stamp duty holiday introduced in July has also increased momentum to the property market but this incentive cannot take the full credit as demand was already seen strong prior to this. With this incentive ending April 1st 2021 it is certain to mean that the first quarter of 2021 will stay very busy as people race to get completions sorted in time to reap the benefit. Rightmove notes that although demand is likely to slow down in the second quarter of 2021 as the stamp duty holiday ends, it won’t be ‘make or break’ for potential buyers and cheap mortgages will continue to support prices.
Tim Bannister, Rightmove’s director of property data, said: “2021 has a lot of variables, and so is not an easy one to call, but […] we are confident that the housing market will continue to outperform general expectations next year as it did this”. He added that this was reflected in their “more conservative” forecast of a 4 per cent rise, compared to this year’s 6.6 per cent increase.
We love a practical example so let’s take a look at a few, exploring the gains you could make in 2021 if you invest in a property this year.
Slough
Studio property current purchase price = £185,000
4% Capital growth = £7,400
Rental predictions = £800PCM / £9,600PA
Total Capital Growth & Rental Income Figure 2021 = £17,000
Leeds
1 bed property current purchase price = £160,000
4% Capital growth = £6,400
Rental predictions = £850PCM / £10,200PA
Total Capital Growth & Rental Income Figure 2021 = £16,800
Preston
2 bed property current purchase price = £170,000
4% Capital Growth = £6,800
Rental predictions = £895PCM / £10,740PA
Total Capital Growth & Rental Income Figure 2021 = £17,540
Manchester
3 bed property current purchase price = £254,000
4% Capital Growth = £10,160
Rental predictions = £1,600PCM / £19,200
Total Capital Growth & Rental Income Figure 2021 = £29,360
*Examples are predictions and based on gross figures so therefore does not take into account any property-related costs or taxes an individual may occur. 4% is based on the UK and specific region areas may experience more or less capital growth than this.
*Rightmove’s index is based on the asking prices of nearly 90,000 properties advertised for sale on its site in December.
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For details of all our current property investment opportunities in the UK go to the ERE Property website.
