Market insights from the Strutt & Parker research team
Strutt & Parker today launches its quarterly house price forecast, doubling our previous quarter prediction of 5% best-case scenario growth in 2021 for the UK to 10%, with a downside risk of 5% growth. The best-case scenario growth for Prime Central London (PCL) this year remains at 5%. We have also upgraded our five-year forecasts, estimating price uplift in the UK of between 20% and 35% (previously 15% and 25%) and in PCL our forecast remains at between 15% and 35% growth.
The outlook for lettings in PCL is improving slightly with more activity reported in the market by agents. However, a lack of stock and the reduction of international renters, as a result of COVID-19, is impacting prices. Restrictions and additional legislation on landlords have also made the rental market less attractive. In terms of lettings transactions, Q1 2021 and Q2 2021 saw 132% and 155% growth (respectively) on historically low Q2 2020 levels.
The continued strength of Q2 2021 sales has maintained the positive sentiment that came to fruition in the previous quarter. The market is at some of its strongest levels ever seen in terms of price and transactions, although stock is low in the regions. On the other hand, the lettings market is experiencing issues with low market activity and decreasing prices. Despite the positivity experienced so far in 2021, the threat of COVID-19 and its impact on the market is by no means removed.
Economic and market indicators underpin our house price forecasts. The current economic outlook is optimistic for 2021, but the indicators are currently subject to considerable uncertainty as globally, we continue to face an unprecedented situation.