Aneisha Beveridge, head of research at the estate agent, (pictured) said the housing market had recovered well from the lockdown, but warned “the real challenges won’t be felt until 2021”.
It’s forecast report read: “We do not underestimate the level of uncertainty that lies ahead. The second quarter of 2021 will be a challenge given that the withdrawal of government support will bring job losses.”
According to the forecast, the final quarter of 2020 will continue to build on the momentum which has so far resulted in an average national house price rise of two per cent during the year.
Wales is expected to see the biggest rise at three per cent, followed by London, Yorkshire & the Humber and the North West – all with 2.5 per cent increases.
Meanwhile the East of England and the West Midlands look set to lag behind with prices rising by just one per cent this year.
Overall, around one million transactions will be completed in 2020 – 11 per cent down from last year.
Best case scenario
The scenario for 2021 assumes 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 occurring.
Under this positive scenario, Hamptons expects prices in Great Britain to remain flat during the year, however this will mark notable variability with falls of around 1.5 per cent in the West Midlands and one per cent in London and the South West.
Conversely, house prices are expected to rise gradually in six of the eleven regions.
Under this scenario, activity may weaken as job losses peak and the real economic impact of the pandemic begins to be felt but transactions may rise slightly to 1.1million – still around 100,000 below the five-year average.
“Transactions should rise gradually in 2022 and 2023, exceeding the average of the past five years, as the economy returns to health,” the report noted.
“Assuming lenders reintroduce a wider range of high loan-to-value mortgages, more people will be able to buy their first home or move up the ladder to a larger property.
“However, two factors will put a cap on transaction numbers: muted sentiment among buy-to-let investors and the ending of Help to Buy.”
Predictions for the rental market show rents falling nationally by around one per cent in 2020 and 2021, but then picking up by around 2.5 per cent and three per cent respectively in 2022 and 2023.
Economic consequences
Beveridge explained the market has been buoyed by pent-up demand going back to 2016 as well as a rise in the number of households making lockdown-induced lifestyle changes, all topped off by a stamp duty holiday.
“We believe house prices are set to rise across Great Britain and will end 2020 having picked up from where they started at the beginning of the year,” she said.
“But 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.”
Beveridge noted that in line with a gradual economic recovery, house prices were forecast 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,” she added.
