Rightmove forecasts house price inflation to slightly decline to 4% in 2021

Rightmove plc (LON: RMV) forecast on Monday that house price inflation will keep much of its momentum next year and decline only slightly to 4% despite an expected rise in unemployment, as per the Bank of England’s forecast.

Rightmove shares (read more: how to buy stocks) were reported less than 1% up in premarket trading on Monday. The stock is now exchanging hands at £6.52 per share versus a much lower £4.00 per share in March, when the impact of COVID-19 was at its peak. Rightmove had started the year at a per-share price of £6.40 per share.

The UK housing market recovered quickly in recent months

The UK’s largest online real estate portal said asking prices for properties that were advertised first between 8^th November and 5^th December were 6.6% higher on an annualised basis – a growth rate that it said was unsustainable. In the prior month, Rightmove added, the rate of growth was capped at 6.3%.

The housing market in the United Kingdom recovered quickly in recent months after the government eased COVID-19 restrictions, as people looked for bigger houses to meet their work from home requirements, and benefit from the state-backed temporary tax break on all purchases.

The reduction in purchases taxes is scheduled to expire next year in March. But its impact on the house price inflation, as per the London-based property website, will be minimal, thanks to cheap borrowing costs and underlying demand.

Housing prices recorded the sharpest increase since 2004

Owing to the ongoing Coronavirus pandemic, Rightmove had posted a 34% decline in H1 revenue on a year over year basis in August. Director Tim Bannister of property data at Rightmove said on Monday:

“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.”

In comparison, economists had forecast house price inflation to stagnate in 2021, as per the survey conducted by Reuters in September. In a recent statement, mortgage lender, Halifax, revealed the sharpest increase in house prices since 2004 in the period from June to October.  

Rightmove performed largely upbeat in the stock market last year with an annual gain of close to 45%. At the time of writing, it is valued at £5.67 billion and has a price to earnings ratio of 42.17.