2021 Predictions (and 2020 Predictions Look-back) - PropertyInvesting.net
01-11-2021
2021 Predictions (and 2020 Predictions Look-back)
PropertyInvesting.net team
2021 Predictions (and 2020 look-back)
More objective guidance and insights for property investors. Our aim is to help you improve your investment returns, flag key risk areas and stimulate strategic thought so you can position your portfolio to maximize gains, for the thousands of daily visitors to the website and the thousands of people signed up to your Newsletter. This Newsletter describes our 2021 Predictions and takes a Look-back Review of our 2019 Predictions for good order.
We start with our view on 2021 property prices in the UK followed by economic criteria. Weve been performing this analysis for the last 16 years now. All our previous predictions can be reviewed on the website in our Special Reports section, so you can judge for yourself how accura
te we have been.
687: 2021 Predictions (and 2020 look-back)
655: 2020 Predictions (and 2019 look-back)
632: 2019 Predictions (and 2018 look-back)
612: 2018 Predictions (and 2017 look-back)
589: 2017 Predictions (and 2016 look-back)
557: 2016 Prediction (and 2015 look-back)
553: 2015 Prediction (and 2014 look-back)
496: 2014 Prediction (and 2013 look-back)
456: 2013 Prediction (and 2012 look-back)
409: 2012 Prediction (and 2011 look-back)
356: 2011 Prediction (and 2010 look-back)
301 2010 Prediction (and 2009 look-back)
245 2009 Prediction (and 2008 look-back)
179 2008 House Price Predictions Global
102 Property Price and Economic Predictions for 2007
For 2021, there will be a number of criteria that will pull property prices one way or the other, which we outline below:
- Strong Tory majority provides business-investment stability for the next 3+ years
- After the COVID-19 crisis subsides, Tory policies are set to reward the Midlands/North for Tory votes leading to increasing investment outside London and movement of government jobs out of London to places like Leeds, Manchester, Newcastle and Birmingham
- Brexit relief rally - businesses wake up to the opportunities for Brexit in the
UK for manufacturing and London as a safe haven low tax zone for global business despite the financial services not getting a Brexit deal by end Dec 2020 confidence is likely to return by May 2021 leading to financial boom in London and London house prices increasing from Sept 2021 onwards - Lack of house building, particularly from the period 2017-2020 due to Brexit uncertainties whilst demand rapidly rises after Tory Election victory 12 Dec 2019
- Elizabeth Line (Crossrail 1) to open early 2022
- Mortgages remains fairly accessible though price-wages still high in southern England
- After the COVID-19 vaccine roll-out and Brexit EU deal end Dec 2020 - improving rental market for buy-to-let property as shortages start to develop again as the economy gets going.
- Likely strengthening UK Sterling after Brexit deal and COVD-19 dies away by May 2021 along with strong Tory majority
- Continuing low interest rates and banks continuing to lead supported by government policies.
- London Crossrail opening by end 2021
- Booming UK population, birth rate and immigration with subdued emigration
- Influx of international wealthy people after COVID-19 restrictions lifted April 2021
- Continuing influx of wealthy global citizens escaping economic problems in 2021 for example Saudi-Iran (proxy wars), Africa (unstable countries/corruption), Venezuela (economies tanking), mainland Europe (improving jobs prospects), Russia (flight to safe haven) and China and Hong Kong (fear of government asset seizures, super-rich hedging)
- Socio-liberal centre-left - people feeling confident now that President Biden is US President and the Trump administration is now history
- Continued reduction in the threat of terrorism in the London/UK after Brexit and the UKs more independent, more insular and less military stance makes the UK less of a target for terrorists, along with the ISIS defeat 2019 and US policies reducing Iranian empowerment in the period 2016-2020
Negative Criteria for Property Prices in 2020
- The US Middle East policy is likely to switch to engagement with Iran an
d cool relationships with Saudi Arabia longer term the Iranian empowerment is likely to lead to more conflict before Saudi/Israel and Iran the right will claim that eventually more global terrorism and/or threat of nuclear war will be evident by 2025 as Iranian economic empowerment improves as economic sanctions are lifted - Rental demand in London remains weak due to higher unemployment, services sector jobs losses and people having moved away from London during COVID-19 pandemic - net migration levels of likely to increase from a low of 100,000 to more like 200,000 by end 2012 (though well down from 350,000 early 2017 before Brexit Referendum)
- After the global depression in 2020 economic recovery is slow
- Reduced trade with Europe due to post Brexit transitional factors after 31 Jan 2020
- High levels of debt spending in UK and western countries
- Continued effects of Tory punitive taxation of buy-to-let exacerbating the housing crisis leading to higher rents and shortage of investment in housing.
- Continued public sector jobs losses (except NHS) particularly in areas exposed to these jobs
- High levels of deposits required even with "help-to-buy" measures increases in deposits for buy-to-let are likely after the draconian new buy-to-let tax measures announced 2015-2019
- Difficulty getting mortgages for the average person even with "help-to-buy" measures
- Lending to salary multiples offered by banks not keeping pace with rising house prices
overnment for another 3 years and Brexit deal has been done, the UK has left the EU so after COVID-19 dies away we expect a significant economic pick-up starting around May 2021.
More Space and Outdoor Space: In 2020 the big trend was wanting to move out of cities for more space, a garden (or larger garden) and to take advantage of home working opportunities inflicted by new reactive COVID-19 working practices. Now the home working model precedent has been set, we expect more home working and flexible working long term. Though we also expect people to have missed office working and be keen to get back to at least 2-3 days in the office per week again. So there should be a partial reversal of the trend with people now realizing how they miss the social interaction and facilities that cities provide. Yes, people will want more space for home working but most will want to get back to the cities or at least be close the cities. Because of this, we expect a gradual increase in the demand of city properties and an easing of the demand for town and rural properties starting around April 2021. Longer term in London, with the opening of Elizabeth Line (Crossrail 1) we expect prices in London suburbs like Acton, Maidenhead, Abbey Wood, Forest Gate, Bond Street, Ealing and Paddington to rise sharply. Further afield places like Slough, Reading, Maidenhead, plus city centre areas like Shoreditch-Whitechapel will also see prices robustly rising.
2020 Predictions
Property Price Predictions
1. London +1% (West London +3%)
2. SE England +2%
3. East Anglia +2%
4. Scotland +4%
5. SW England +3%
6. NW England +4%
8. Wales +3%
9. North England/NE +3%
10. Northern Ireland +2%
11. Yorkshire +3%
Note: Published CPI and RPI inflation will start the year at 0.9% and rising to 2.1% by end 2021 as the effects of the oil price feed through (though real inflation will be more like 3%).
Rents
After rents dropped in many areas in 2020, we expect rental prices to pick up early 2021 caused by increasing demand and the wave of printed currency driving up prices. As next migration into London starts up again around April 2021, and draconian tax measures against buy-to-let landlords continue, we expect tightening of rental supply and rental prices to rise across most parts of Britain including London and SE England.
Other criteria
· US Dollar to the UK $1.37 / £1 - stable through 2021
· UK £ to the Euro £1 / 0.88 Euro Sterling staring broadly the same as 2020
· Oil price will fluctuate in band $50/bbl to $60 (WTI) in 2021 supported by continuing OPEC production cutbacks
· UK Gas prices remains around 40p/therm
· UK Interest Rates record low interest rates with a possible slight tightening by end 2021 - inflationary pressures build rapidly after huge currency printing - easing
· FTSE100 index stays same to 6500 by end 2021
· UK Inflation CPI starts year rising from 0.9% end 2020 and increases to 2.1% by end 2021
· UK GDP rises from approx -5% end 2020 to +2.5% by end 2021.
· UK unemployment continues rise from around 5% to 6.5% by end 2021
· Wage inflation ~1.5% throughout 2021 in both private and public sectors
· GDP growth London 2.7%, North 2.5%, Midlands 2.5%, Scotland 2.0%. Wales 
2% (overall 2.5% for 2020)
· GDP China 6.0%, GDP India 4.5%, GDP Africa 2%, Global GDP 2.3%, UK 2.5%, USA 2.7%, Euroland 1.9% - as a whole over 2021 a recovery after a depression
· Gold prices increase from $1900/ounce to $2000/ounce, and silver increase from $27/ounce to $31/ounce
USA debt situation A rising tax burden, lower US oil production and oil prices, less business friendly regulation will rather stifle GDP growth though a recovery will be evident after the COBID-19 crisis. Less trade wars with China will help but engagement with Iran could empower them to cause regional problems. Overall continued gigantic currency printing raising government debt to dangerous levels with more hand-outs and public sector projects supported by new democrat left of centre policies.
Russia: Sanctions are likely to be eased by the USA in 2021 though fiction will continue bet
ween the US and Russia.
Middle East: Saudi Arabia will feel more isolated and upset with the new US-Iranian engagements that will take effect in 2021. Israel will also be upset. The Middle East financial situation will continue to suffer from low oil prices, though since they have risen to $50/bbl by end 2020 which will improve deficits (most Middle East countries need around $80/bbl to balance the books).
China South China Sea: Military spats and escalation over disputed islands between USA/China and possibly Japan is a possibility though less likely then during 2017-2020 during the Trump administration.
The Biden Effect: We see a big Middle East policy shift towards engagement with Iran in 2021 -this will embolden them. The will also be an easing of the US-China trade war. Biden is likely to support the EU and be cool on the UK post Brexit no special favours on trade deals. Biden will also cool on the US relationship with Israel and Saudi Arabia. In summary, a reversal of the Trump policies is highly likely.
Note: Just like the last few years predictions, sometime in the next 6 months to 4 years we expect a real economic-financial crisis in western developed nations caused by the US bond market meltdown. At this time, gold and silver prices will go ballistic (silver from $27/oz to $400/oz and gold from $1940/ounce to about $6400/ounce). The Dow Jones may rise, but inflation adjusted real terms will decline still in an overall cyclical bear market.
UK Politics
The Tory party have a huge 80 seat majority, then next election is likely end 
2023 some 3 years to go. However, the Tory handling of the COVID crisis has not been good and Keir Starmer is a viable alternative for many voters in the centre of the political spectrum, so the question is can Boris Johnson and the Tory party recover from the COVID-19 setbacks and angst around Brexit to win voters to achieve a majority end 2023. They have certainly got enough time to do this if these two key problems are managed away then there is economic growth through the period to end 2023, a Tory majority would look very likely again. But as we know, a few weeks in politics is a long time and anything can happen. For 2021 we expect a recovery in fortunes starting April 2021 once the vaccine programme has been rolled out further, the summer season naturally kills of the virus and everyone gets used to the UK being outside the EU hopefully with some progress on the EU financial services sector deal. One very positive thing for the Tory party is that they navigated through the likes of Corbyn (far left) and Farage (far right) to exit the EU after some much angst and in doing so killed off the far left (Corynbites) and far right (UKIP). The only big thorn in the side of the Torys is now the SNP though since they have largely taken Labour votes in Scotland, this helps the Torys achieve a majority overall of course.
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Lookback on 2020 Predictions
Special Summary: No one foresaw in early Jan 2020 that the COVID-19 global pandemic would dominate the economy. Despite this, the house price prediction was close.
Property Price Predictions
1. London 3% (West London +4%)
2. SE England 2%
3. East Anglia +4%
4. Scotland +4%
5. SW England +4%
6. NW England +5%
7. Midlands +5% (East Midlands +5%)
8. Wales +5%
9. North England/NE +5%
10. Northern Ireland -1%
11. Yorkshire +5%
Actual house prices increased around 6% in England (around 3% in London)
Note: Published CPI and RPI inflation will start year at 2.3% and drop to 1.8% by end 2019 as the effects of the oil price feed through (though real inflation will be more like 3%).
Rents
Rent rises will be in line with inflation rental property shortages will be counteracted by a reduction in net migration to levels flat living from Mar 2019 to end 2020 at 226,000 per annum (down from 360,000 mid 2016 before Referendum). Draconian tax increases on buy-to-let landlords will also cause a further tightening of the rental market particularly in London and SE England. Actual: Rents dropped in London by 5-10% though rose in most other areas between 1 and 5%.
· US Dollar to the UK $1.33 / £1 - stable through 2020 (ended $1.37)
· UK £ to the Euro £1 / 1.13 Euro Sterling slightly recovering to 1.19 end 2020 from 1.13 (ended £1.13 same as start)
· Oil price will fluctuate in band $55/bbl to $75 (WTI) in 2019 - OPEC cutbacks larely offset higher oil production from US Texas Permian oil shale field. Oil price crashed off the back of COVID-19 demand destruction to $15/bbl before recovering to $51/bbl by end 2020.
· UK Gas remains firm at price 30p/therm. Ended year higher at 41p/therm
· UK Interest Rates no interest rate changes reducing inflationary pressures mean rate remain low Interest rates dropped to record low caused by COVID-19 crisis
· FTSE100 index stays same to 7450 by end 2020 Ended 2020 lower at 6460.
· UK Inflation CPI starts year rising from 1.8% end 2019 to 2.3% by end 2020 Inflation dropped to 0.9% after COVID-19 crisis
· UK GDP rises from 1.1% end 2019 to 2.2% by end 2020 as Tory majority provides growth and stability COVID-19 crisis hammered GDP starting mid March 2020 with GDP crashing -10% by end 2020.
· US-Iran direct war of sorts starts in earnest with significant tit-for-tat through 2020. Tensions between Saudi Arabia and Iran continue to stay high (with continued proxy war in Ye
men). Russia possible invasion of eastern Ukraine. Nuclear arms race gathers momentum. Hotspots being US-North Korea, US-Iran, Israel-Palestine. US-Iran fairly quite probably because of focus on US Election and potential policy shift early 2021. Proxy wars continue though news eclipsed by ongoing COVID-19 global pandemic crisis
· Euro interest rates stay the same in 2019. Actually dropped 0.5% due to COVID-19 recession
· US Interest rates stay at 1.5% through 2020. Actually dropped 0.5% due to COVID-19 recession
· UK unemployment continues to drop from 3.8% to 3.6% by end 2020 as economy picks up Actually rose sharply to well over 5.5% due to COVID-19 recession
· Wage inflation ~2.3% throughout 2020 in both private and public sectors above the general CPI inflation Actually dropped around 1.5% due to COVID-19 recession
· GDP growth London 2.2%, North 2%, Midlands 2%, Scotland 1.0%. Wales 1.7% (over
all 2.2% for 2020). Actually crashed 10% initially and -5% by year end due to COVID-19 recession
· GDP China 6.3%, GDP India 5%, GDP Africa 2%, Global GDP 2.3%, UK 2.2%, USA
· Gold stays around $1450/ounce level, silver stays at $18/ounce level. Actually gold rose to $1880/ounce by year end due to currency printing-devaluation and panic caused by the COVID-19 pandemic. Silver rose to $27/ounce.
USA debt situation Lowering tax burden, higher US oil production and business friendly regulation and ending some of the trade wars with China will help lift GDP growth from 1.1% to 2.2%. This should lift the pressure on the US dollar and debt situation unless a big recession starts. Trumps spending spree on infra-structure and military will also help business. Unemployment continued to drop. Threat of war with Iran, Russia, China and North Korea however will stay high in 2020. Actual debt levels rose sharply caused by COVID-19 crisis its likely government were more concerned with COVID-19 than starting wars.
Russia: Sanctions continue to bite and Russia stays subversive and out of Trump direct way they may invade eastern Ukraine and increase their influence in Syria. Actually relatively quiet likely because of COVID-19 priroities.
Middle East: House of Saud finances improve now oil prices have risen $65/bbl th
ough budget does not balance until oil prices are around $90/bbl. Continued proxy war with Iran in places like Yemen, Iraq and potentially directly with Iran keep a lid on investment. Middle East and North Africa continue to be unstable with bad situations continuing in Libya. Correct continued proxy wars though less activity and less news due to COVID-19 and national priorities.
China South China Sea: Possible military spats and escalation over disputed islands between USA/China and possibly Japan. Actually fairly quiet.
The Trump Effect: 2020 will be dominated by the US Presidential election with Donald Trump 50% chance of re-election (he may be impeached though this might not prevent him remaining in office being re-elected). Trumps behaviour is likely to get more volatile and unstable with the threat of US-Iran war and China-USA trade war hanging over the economy. Correct Trumps behaviour became far more volatile culminating in the attack on Capitol Hill, though COVID-19 priorities may have prevented some international military incursions.
Note: Just like the last few years predictions, sometime in the next 6 months to 4 years we expect a real economic-financial crisis in western developed nations caused by the US bond market meltdown. At this time, gold and silver prices will go ballistic (silver from $18/oz to $400/oz and gold from $1480/ounce to about $6400/ounce). The Dow Jones may rise, but inflation adjusted real terms will decline still in an overall cyclical bear market. Trend correct gold and silver rose to $1880/ounce and $27/ounce respectably the possible start of a bull run and blow-off caused by gigantic fiat global currency printing of almost all currencies.
UK Politics
After Brexit 11pm 31 Jan 2020 the subject will get a lot less press and interest as the Tory party aim to negotiate a trade deal with the EU by end 2020. The big national topics are likely to be: 1) increasing NHS funding-projects; 2) northern/midlands development-investment; 3) for socialists who becomes Labour leader; 4) relationship with USA post election. On the Labour leadership the unions are
likely to vote for Rebecca Long-Baily similar policies to Corbyn and northern women
that could attract northern voters back. Moderate socialists for Sir Keir Starmer who would be by far the biggest threat in 5 years time to a Tory majority based in London though Labour dont need more London votes, and he was a disastrous shadow Brexit Secretary though he looks and sounds good! It looks like UKIP, nationalist and Brexit parties and likely a Reform party - have been killed off. SNP will try and get another Referendum but Boris Johnson will stop this and tensions with Sturgeon (who is not an MP in Parliament) will continue. Correct Brexit got less press in 2020 also because of COVID-19. Sir Keir Starmer was elected leader of Labour. Corbyn was assigned to history. UKIP largely became irrelevant by end 2020 as the UK left the EU.