'The only certainty we have going into 2021 is more uncertainty...'

That quote relates to the housing market and comes from the Royal Institute of Chartered Surveyors.

However, while overall figures are impossible to predict – who knows what the percentage change in property values will be over the next 12 months – we can at least look a trends and analyse likely changes for both property owners and those renting.

We can also learn a lot from 2020. Going into 2020, most analysts predicted a fall in property value – and this before anyone had heard of Covid-19... Despite this, we saw just how resilient the housing and rental markets can be, but we also saw some more worrying developments.

Given what we faced in 2020, maybe 2021 isn't so hard to predict after all. Here are our thoughts on the next year.

More Certainty

We started with a quote about uncertainty and we do understand the RICS position. However, in some ways 2021 provides far more certainty than we experienced in 2020, even if at the time of writing we have entered a third national lockdown.

The UK has a Brexit deal and, whatever you may think of Brexit and the deal itself, at least there is some certainty there.

Vaccines are being rolled out and the impact of Covid-19 is far more quantifiable than was the case in early 2020.

As individuals, we can make informed decisions in 2021. Some may decide where they live is no longer ideal in a changed world. Others might want a bigger property as they see a future that involves less socialising.

Another group might see a return to the city centre as appealing after a year of enforced isolation.

On an individual level, people will have more certainty and that makes it easier for them to make decisions.

There might not be a huge amount of certainty about 2021, but there is maybe more than we had for large parts of 2020.

Property Price Increase (or will they)

Property prices will go up by 4% on average across 2021 according to RightMove. However, the Halifax predicts a fall of around 5% and the Office for Budget Responsibility predicts an 8% fall - all these predictions made in late 2020, before the latest lockdown.

Everyone else falls inbetween, most predicting a small overall growth.

Where does the truth lie? In 2020, pundits predicted a fall and we got the opposite.

What seems likely is that the market will remain resilient. The first quarter of 2021 will have conflicting trends - lockdown, but also the final few months of the Stamp Duty holiday.

Beyond that, the furlough scheme was set to end in spring, but will likely now be extended. There are also whispers that the Stamp Duty holiday could be extended too.

It's easy to reverse engineer any prediction – state there will be a 5% increase and find positive reasons – economic recovery, vaccines; or say there will be a 6% dip and cite other factors.

If you're looking for a national average figure for the entire UK you might as well just guess at a random number.

What we do know is that the property market remains resilient and also that the government has shown a willingness to avoid any major fall in values.

The Move Out The City?

Many have predicted that there will be a move out the city, with working from home making it more appealing to live in a rural location.

Will this happen? Others have their doubts. It may be that the moment has already passed, if we return to something approaching life as it was, offices will open again. It may be that there is more of a mix of WFH and office work – split weeks, with some time at home – but this would still make a move into the sticks problematic.

It may also be that many will relish city centre living after a year in which interactions have been curtailed. Why spend 2020 stuck in a city centre flat and then leave just as it's possible to socialise once more?

What may be more likely is that while people stay in the city, priorities change a little. People will want properties with excellent wifi, but also perhaps a bit of extra space to use as an office and also gardens may become more sought after.

For a city such as London, this might lead to a short move to areas that are still easily commutable but offer a bit more for the money. South east London and Kent could be potential beneficiaries.

Rental Market Will Face Its Own Problems

One major problem for some landlords in 2020 was that they were unable to start proceedings against tenants who wilfully stopped paying rent for no good reason - this very separate to tenants who struggled to pay rent through changed circumstances.

The government offered no assistance to landlords and so many went months receiving no income on their property, yet unable to evict even the very worst of tenants.

The resumption of lockdown will lead to a further backlog of cases and further misery for many landlords. The chancellor has helped many areas of the economy, will funds be found to help landlords who are struggling through no fault of their own?

Overall, though, demand for rental property is expected to remain as high as ever - indeed many who may have considered switching to home ownership will decide now is not the time. Uncertainty about their own employment alongside the housing market as a while will persuade many that 2021 is not the year to make the switch.

It is worth noting that the rental market is traditionally more resilient than home buying - SevenCapital report that in the 2009 financial crisis rental incomes fell by 2%, whereas house prices fell by 18%. Savills predict a double digit increase in rent prices across 2021 - admittedly this prediction made before the Covid picture turned bleaker once more.

One exception could be student accommodation, much of university learning has been online this past year, so will students be drawn to studying away from home in the same numbers only to be faced with remote learning?

Expect localised patterns - London areas such as Kent perhaps far more resilient than a town where a large percentage of rentals are to the student population.

Peaks and Troughs

We suspect that while the overall direction of travel will be towards increased rental yields and property values, even if only subtly so, this will not be a smooth journey.

There are simply too many intangibles. There is there Covid-19 pandemic - how much of 2021 will this impact, when will the economy open up once more and to what extent?

How will Brexit impact the UK, will the new US administration impact the UK economy, especially around London?

It is perhaps worth remembering this however challenging the next few months might be. If 2020 told us anything property wise it is that demand can get pent up. A quiet start to 2021 could be followed by rapid increase.

Just don’t hold us to that. As with everyone, all we can do is make a best guess at this stage!