UK Real Estate Market Forecast: What Will 2021 Bring?

The coronavirus has led to the prediction of a “collapse” in the UK real estate market. Prior to this, Brexit has not yet materialized.

If the real estate market is one thing, then it can resist economic forces.

Despite some significant tests in the past few years, especially due to the Covid-19 pandemic in 2020, the UK real estate market remains strong.

But what will happen in the real estate market in 2021 and beyond, is now a good time to buy real estate?

Here, we will study some predictions that may affect buyers, sellers, and landlords next year and in the future.

2020 Real Estate Prices

Despite the pandemic and the spring shutdown, the UK real estate market has performed well since the restrictions were lifted at the end of May.

The stamp duty cuts in England and Wales supported a strong “rebound” in the market, while buyers and sellers who could not move during the spring ban strongly suppressed demand.

Nationally, Rightmove predicts that UK real estate prices will rise by 7% in 2020.

Zoopla also predicts that the price increase in 2020 will reach 4%.

Both figures are significantly higher than the 1.4% growth in 2019.

According to Rightmove’s forecast, there are differences between regions. Still, in the western and central-eastern regions of White Gates, Yorkshire and Humber, and the core areas of Wales and the northwest, price growth has reached exceeded the national level.

Yorkshire And the Humber

Average annual price growth (until November 2020): 8.6%

2019 price growth rate: 1.8%

Difference: +6.8%


Annual price increase (until November 2020): 10.3%

Price growth rate in 2019: 1.5%

Difference: +8.8%

East Midlands

Average annual price growth (until November 2020): 7.1%

2019 price growth rate: 1.9%

Difference: +5.2%

North West

Annual price increase (until November 2020): 9.3%

Average annual price growth rate in 2019: 3.2%

Difference: +6.1%

2021 Real Estate Market Forecast

How we will perform in real estate prices after 2021 will depend on many factors, including the potential coronavirus vaccine and ongoing problems caused by the pandemic.

Britain will also sever ties with the EU on December 31, and the market may be affected by any potential Brexit agreement or no agreement.

Regarding the real estate market in 2021, most commentators are cautious, and growth forecasts will improve by 2022.

Price WaterhouseCoopers (PwC) predicts that if there is another serious coronavirus outbreak, the “worst-case” will drop by 7%. However, the company added that if the UK can contain the Covid-19 spread, there is a greater chance that house prices will rise by 1%. It shows that within five years, house prices will increase by 4% by 2025.

The “upside scenario” of the Office of Budget Responsibility predicts that prices will remain stable for the remainder of 2020 and will rise by 4% in 2021, followed by “strong growth” in 2022.

Interest rates will remain at record lows, and buyer demand should remain strong in the first quarter of 2021 until the remaining stamp duty holiday until March 2021.

Stamp Duty Reduction and Purchase Assistance

Since the lifting of the Covid-19 spring lock at the end of May, the real estate market’s activity has been partly due to the reduction in stamp duty.

Now, the first £500,000 in the purchase price of a house is exempt from stamp duty, so buyers have been frantically searching for suitable properties to restore stamp duty to the previous level before the deadline of March 31, 2021.

However, Prime Minister Rishi Sunak has not yet ruled out the possibility of extending the stamp duty “holiday” beyond that date.

The purchase assistance program has also been expanded and will remain open to first-time buyers from April 2021.

Further reading…

If you plan to buy your first home in 2021, check out our hot spots for first-time buyers.

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