What Are The Economic and Property Forecasts for 2021?
Last updated: 5.45pm, Friday 8th January 2021
We look in detail at the economic, property and rental forecasts for 2021 in the UK and Glasgow.
By Gordon Campbell
8th January 2021
All this detailed information and blog news we dive into at Alliance Property Group is done to provide you the best, actual and factual information, but also the best property deals and investments.
That ultimately then ensures what we do in providing to you, i.e. accurate information and the right properties in the right location at the right price in the areas of growth with the right demand, is achieved.
So you achieve your financial freedom, goals, legacy whilst creating wealth and income.
Summary: Greater Glasgow Market in 2020
While we are still navigating the pandemic and its potential economic and social consequences, so far, the Scottish property market has experienced a markedly different and very positive pattern of activity compared to previous market downturns.
That was highlighted and shown and explained in great detail in our last blog December 2020 Market Update (click to open)
- Pre COVID, the UK economy was performing very strongly
- Demand and sales and house prices at an all-time high since 2007
- Prices of on market properties selling very quickly and above Home Report valuation
- Rental demand was hugely strong and continues to be for all property types and sizes
- Unemployment remained stable with no major impacts. UK and Glasgow unemployment levels very similar at 4.8% for year-end 2020.
- Most businesses adapted efficiently and quickly to and lockdown requirements
- Businesses and individuals were and are supported well by the UK government with grants, loans, furlough and any social payments that may be required.
- No impact to any lead up or subsequent departure from the EU (Brexit). The sky did not fall in as some were predicting last year.
Quite the opposite.
The pandemic has made many households reconsider the importance of a home as more than just a dormitory and this is underpinning demand and movement in the market, as well as shaping the character and location of property being sought.
Continued pent-up demand, combined with people reconsidering their life aspirations has supported sales values.
What About 2021 Forecasts?
- Britain has become the world's fifth-largest economy once again, despite suffering a deep recession as a result of the coronavirus
- According to the annual league table produced by the Centre for Economic and Business Research (CEBR), the UK has leapfrogged India and is set to push further ahead of seventh-placed Francein the decade after Brexit.
- Britain is expected to have suffered the deepest recession of all leading G7 nations this year.
- The UK's current unemployment rate - 4.8 per cent of the workforce - compares favourably with the EU average of 8.4 per cent. That will rise during 2021 to a potential 7.5% then decline soon.
- The CEBR 9Centre for Economic Business Research forecasts the annual growth rate will be an average of 4 per cent until 2025.
- UK's largest economic sector is digital and creative.
- This year, 2021, the economy is forecast to grow by +8.5%.
- Even though this would leave output 2% lower than 2019 in real terms, unemployment is expected to fall progressively in the last nine months of 2021 which limits the potential for price falls over the course of the year as a whole.
- This progressive fall in unemployment specifically assumes the Covid-19 vaccine continues to be successful.
- The UK is well ahead in vaccinating the population so we hope to see the positive results from that soon.
House Price Forecasts
- Over the next five years the pattern of UK regional price growth to reflect the stage of the housing market cycle prior to Covid-19.
- With very low interest rates and the banks not as over-stretched as they were in the previous recession, we are not anticipating a high level of distressed sales, unless, for example. there is a marked and sustained increase in unemployment or a collapse in lending.
- Over the next 5 years, we expect house prices to rise in Greater Glasgow by around 20% from this year 2021 to 2024, the highest growth in the UK
- In Glasgow, the market uptick, so often seen in the third quarter of the year, looks set to be sustained throughout much of 2021.
- The rental market in Greater Glasgow continues to be hugely optimistic with continued high demand for rental property of all types and number of bedrooms
The race for space continues.
Rental Price Levels
- With the continued demand we saw last year and continue to see already this year, rental prices have increased strongly in all sectors of the BTL market. That is set to continue in 2021.
Questions and Answers
Here is some questions we have been asked in the last week with new investors, all good and thought we would share them with you.
Just wondering if now is a good time to buy in Greater Glasgow?
The open market/properties advertised by estate agents are all selling very quickly and above the valuations.
That happened last year and is set to continue this year.
So yes, it is always a good time to buy as long as the property meets your criteria and strategy.
That is why what we always sell is:
- Off Market and genuine high discounts and yields
- The right properties
- In the right place
- At the right price
- With the right demand for rent and or eventual resale.
Why we only sell off market property blog link:
Is there any risk of rental vacancies due to COVID?
The demand for renting good properties in the right area is very strong. Tenants who have been furloughed or have been struggling have all been well supported by the UK government so very minimal impact of any issues with rents not being paid.
How long does buying and refurbishing a property take on average with Alliance?
- 4 weeks to purchase
- 2 weeks to refurbish (all our refurbs are simple cosmetic and uncomplicated)
- 2 weeks to tenant
- Every property that we send out has had a huge amount of diligence done on it and there is no surprises on anything (price, refurb, rent, costs).
It is very accurate.
Has there been effect of Brexit on the property market or the economy?
None at all.
Businesses have been prepared for a long while for whatever the outcome was going to be so can now continue to flourish in the new agreed agreement with the EU.
Will there be any changes to stamp duty rates or extension of the current incentives that are due to end on 31st March 2021 rates?
There has been no announcement from the Chancellor as to the current incentives wil be extended.
There was new legislation passed last year that as from 1st April 2021 that any overseas investor will be applied an additional LBTT 2% tax on top of the current 3% or 4% for all properties over £40,000. So effectively 5 or 6% of the asking price on LBTT.
Remember: 98% of the properties we sell from Alliance Property Group are below the £40,000 purchase price so this is another benefit.
We are here for you.
2021 will bring us plenty of continued great properties to Alliance Property Group.
We will continue to share our 37 years of experience, knowledge and expertise with you, help achieve your property goals, financial freedom and build a lasting legacy.
We are here with you at every step of the way - we will get there together.