Rightmove forecasts house price inflation of 4% for 2021

LONDON (Reuters) – British property website Rightmove forecast house price inflation would slow modestly to 4% next year, retaining much of its momentum despite the looming end of a tax break and forecasts of rising unemployment.

Rightmove said asking prices for property first advertised between Nov. 8 and Dec. 5 were 6.6% higher than a year earlier, a rate of growth it said was unsustainable and up from a 6.3% annual increase the month before.

Britain’s housing market unexpectedly boomed after the initial end of COVID lockdown restrictions in June, as people sought bigger houses better suited to working from home, and to take advantage of a temporary reduction in purchase taxes.

The tax break is due to expire at the end of March, but Rightmove said underlying demand and cheap borrowing costs meant this was unlikely to lead to much slowdown in activity.

Rightmove’s director of property data, Tim Bannister, said:

“There’s likely to be a lull in quarter two unless the stamp duty holiday is extended, but for many buyers its removal will not be make or break, though may lead them to reduce their offers to a degree.”

The Bank of England reported that lenders approved the most new mortgages since 2007 in October, and mortgage lender Halifax said house prices had risen by the most since 2004 in the five months since lockdown ended.

By contrast, economists polled by Reuters in June forecast house prices would fall 5% this year due to the pandemic, and when they were last surveyed in September, they predicted prices would stagnate in 2021. [GB/HOME]

While the BoE forecasts Britain’s economy will steadily recover from the pandemic next year, it predicts unemployment has yet to peak – with almost a million more people set to lose their jobs by June – plus extra potential damage if Britain and the EU fail to reach a trade deal.

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