Revised forecasts

Like most people my old firm has been wrong-footed by the Pandemic and more importantly the extraordinary support that the Government has shown towards the housing sector. Last week’s budget saw an extension the the Stamp Duty holiday and a new (or should I say renewed) version of Help to Buy with the old mortgage guarantee scheme first produced in 2013 and closed in 2016. So predictions have been torn up and newly moistened fingers have been waved in the air.

What a difference a year makes. Here is what Savills were saying in March last year;

It’s important to remind you that nobody knows what is going to happen but that doesn’t mean we can’t all have a good guess.

One of the biggest agents now thinks that the average property price is set to increase by £10,000. Savills expect prices across the UK over the next 5 years to rise by 21%.

London is now forecast to see a rise this year of 2.5% and of 12.6% over the next 5 years.

Transaction volumes, they think will remain steady at around 1.2m a year.

Knight Frank have raised their expectations too for annual UK house price growth in 2021 from a January estimate of zero to 5%, after the Budget “changed the landscape for the housing market”.

Speaking to FT the firm said that house price growth in Greater London has lagged behind the rest of the UK in the past year. But it is expected to rise by 4% this year, up from their previous forecast of 1%.

Capital Economics has also revised up its figures from a fall of 4% in prices this year to a rise of 3%, while its 2022 forecast remains the same, with prices rising 2.5%.

Remember – nobody instructs a depressed estate agent.

There are as many views as there are people you are prepared to ask and it’s fair to say that there is a broad spectrum of views. Some people are understandably worried about who is going to pay for the Pandemic. Some are concerned that there will be millions who are earning perhaps 80% of what they were earning just 12 months ago but it’s also worth noting that banks say that they are holding piles of cash. Some people have had a good pandemic, their jobs are secure, they are earning more and have saved a good deal. Many buyers are now prepared to pay 10-20% more than they would have for the right property to ensure their home is fit for whatever comes next.

Who knows what is going to happen? All I can observe is that having seen just how far the Government will go to support the market many people seem to be prepared to pay ever more for the right home and that a surprising number of people have the ability to do so.