The year 2020 has been extremely unpredictable across all business fields and markets. Although real estate is not the industry that’s been most affected by COVID-19, the pandemic has nonetheless made a significant impact on the commercial and residential real estate sector, as well. As the year came to an end, it’s high time to reflect and anticipate how the real estate market situation will look and if it’s worth investing in real estate in 2021.
There are two factors that are predicted to influence the UK property market considerably in 2021. One of them is the ongoing pandemic, while the second is the end of the Brexit transition on 31 December 2020. Many negative aspects come into play when we assess the condition of the economy in general and the property market specifically. According to Bloomberg, the unemployment rate in the UK is at its highest in four years; people feel uncertain about their job situation and face wage cuts. In this situation, the majority of the population tends to hoard capital and stay away from significant investments. As history illustrates, such behavior leads to price drops in the market as well as a recession.
However, consumers’ behavior on the market during the current crisis has proven to be different. Generally, from March, the meaning and purpose of a home have been redefined for many people worldwide. People are getting used to remote work, which results in searching for homes further from the city center with the additional need for home office space, and, in many cases, a garden or patio. While it is not clear for how long this trend will last, it will most certainly impact the future of the real estate sector.
With these factors combined, it can be stated that the future of the property market is most probably not as gloomy as experts predicted it might be only a few months ago, although we cannot hope for miracles in the next year as well.
Generally, many analysts agree that 2021 is expected to be a year of stagnation for the real estate market, with the first and, especially, the second quarter of the year being the most troublesome. This projection comes based upon the withdrawal of government support, resulting in more layoffs. However, experts anticipate a period of growth starting from the third quarter of 2021. Hamptons International presents a property market forecast for 2021, breaking it down to the regions in the United Kingdom. There are a few peculiar regional trends to observe closely during the next year.
Among them is Wales, which is expected to continue its growth in 2021 and expand even faster throughout the following years. Analysts predict Wales to be the best-performing region in the UK in 2020, with a growth rate of 3%.
Similarly, Scotland is another auspicious property market, but in the longer run. While in 2021, the prices are projected to be stagnant, they have been rapidly growing before the pandemic and presumably will bounce back after the next year.
Overall, the North looks very promising, even during these times of pandemic. The prices are rising in 2020, with the tendency to grow an additional 0.5% when it comes to the North West and 1% in the North East in 2021.
The situation for the South West real estate market seems to be somewhat tough, as this region relies on tourism and, at the moment, struggles with a high unemployment rate. Experts predict a fall of 1% in the market next year; however, by 2023, experts foresee a 3% growth, so it will certainly bounce back in the next years.
The property market might suffer the most throughout the next year inthe Midlands, where analysts anticipate prices dropping from 1% to 1.5% depending on the region. There are projections of slow growth by 2024, although judging by the current situation, it might be the lowest-performing region in the UK real estate market for the upcoming years.
When it comes to London, it seems like it will follow the pattern of a slight 1% decline in 2021, with the following rise of 1.5% in 2022 and 3% in 2023.
Even though the property market is expected to be stagnant at the beginning of 2021, the projections regarding the following years are much more positive. From 2022 and on, experts presume a gradual growth. Choosing to invest in real estate in 2021 can be an incredible (although a bit risky) move, as the prices in the coming years are expected to rise.
Author Bio: Mariia Kislitsyna serves as an editor and writer for the Rentberry and Landlord Tips Blogs, dedicating the majority of her time to finding great new cities and interesting real estate information to write about. As a polyglot and literature fanatic, she also enjoys writing about culture, travel, and career, and she’s been featured in and written for a variety of publications across the web.