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How to: Predict the property market

Last updated: 26th February 2021

We don’t have a crystal ball to predict the property market. And nobody can really tell you exactly what’s going to happen.

But what we can give you is the knowledge and the tools you can use to make educated decisions in an attempt to predict (sensibly) what’s likely to happen.

If you’re an avid Property Podcast listener, you’ll know Rob & Rob make yearly predictions – they’ve already shared their 2021 predictions as well as their 2021 property hotspot predictions. And while they get a lot right… it doesn’t always go that way.

But what they get right isn’t by pure guesswork, it’s thorough research and market knowledge.

Before we delve into what’s in-store for the property market this year, let’s take a look at why you shouldn’t take experts’ opinions as the gospel truth.

A look at the 2020 property market

While it’s not quite as volatile as the stock market, property does have movement. But things like sentiment, market and economic conditions can sometimes throw in the odd curveball we wouldn’t usually expect.

Take 2020 for example, nobody predicted a global pandemic. So those who went live with their predictions at the start of the year found themselves quickly scrambling to revise them come March when coronavirus started to take hold across the UK.

Industry experts, Knight Frank, predicted the property market was going to fall by 3%, while JLL predicted an 8% fall. CBRE expected it to fall by a whopping 13%!

But what happened?

The property market in 2020 grew by 7.6%!

So while it’s been a tough year for the economy and people’s individual circumstances, property has held its own in the asset class rankings – of course, helped by the much welcomed stamp duty break.

The 2008 financial crisis

As we saw with the year 2020, predictions can be wildly inaccurate and if you take them too seriously, can take you in the completely wrong direction.

Another example of industry experts getting it very wrong was the 2008 financial crisis.

Despite property prices already starting to fall in the second half of 2007, most experts said the property market would remain flat or see a slight decrease.

Did anyone see a property price decline of 15.9% happening?

Wrong predictions are made time and time again. In 2013 Knight Frank said prices would remain flat, Savills said they’d be up 0.5% and Hometrack predicted a 1% decline – when prices grew a very healthy 8.4%.

If you’d have listened to these predictions back in 2013, you’d have missed out on that growth and ROI.

In a nutshell, and even though we make predictions ourselves, this is why we think predictions in general are pretty rubbish.

How to ‘predict’ the property market

You don’t need to make predictions to be a successful property investor, but by educating yourself, you’ll have a much higher chance of achieving success.

Two key starting points would be making sure that you know why property prices rise in the first place, and how property will make you rich in the long term.

Another core topic that you need to understand is economics. We know it’s not the most exciting of subjects, but it’ll transform the investment decisions you make. Why often try and simplify it as best as we can, and we’ve even compiled the work of Ray Dalio and broken it down into easily digestible chunks to help you wrap your head around it.

And finally, you need to know how the 18 year property cycle works. If you’re going to try and predict the property market, you need to know the cycle movements before investing in property to make sure you don’t invest at the wrong time.

So there you have it, some helpful starting points on how you can predict the property market.

If you need a little more help getting started with your property journey, join us for a free webinar designed to give you everything you need to know, all in just 30 minutes.

We’ll even send you extra FREE resources so you can keep up your learning and keep the ball rolling with your property investment journey. It won’t cost you anything, just 30 minutes of your time.

We look forward to seeing you there.

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