A sales and lettings firm has conducted interesting research into how accurate predictions made for rental growth by property experts were during 2016.
Surprisingly given the turbulent nature of the last year, many forecasts were actually very close to being correct.
Predictions
The analysis of property market predictions was made by sales and lettings firm KIS and revealed that estate agents Knight Frank were closest with its suggestions.
Knight Frank correctly estimated that the UK annual rent growth for 2016 would stand at 2.3%. Belvoir, Savills and the Royal Institute of Chartered and Surveyors were also fairly close-all predicting a rise of 3%.
Official data from the Office of National Statistics reveal that rents did indeed rise by 2.3% during 2016.
However, KIS’ own analysis of 20 regions in the North East shows that rents in the area rose from an average of £554 in December 2015 to £591-an increase of 5.9%.
The list below shows how many firms and peers suggested rental growth would rise by in the last year:
- Knight Frank – 2.3%
• Belvoir – 3%
• Savills – 3%
• Royal Institute of Chartered Surveyors – 3%
• Countrywide – 3.5%
• JLL – 4.5%
• Price Waterhouse Coopers – 5%
• Hamptons -5.5%
• Property Commentator Henry Pryor (interviewed by Zoopla) – 6%
Who was closest with their predictions for rental growth in 2016?
Fantastic forecasting
Ajay Jagota, managing director of KIS Group, noted: ‘If we’ve learned one lesson from 2016 it’s that predicting anything is asking for trouble, but if these figures are anything to go by property experts are doing a much better job of foreseeing the future than professional pollsters do at election time.’[1]
‘The average rent rise prediction in the forecasts we’ve revisited was 3.9%, and although we’re the first to admit that that figure isn’t exactly scientific, it does appear that industry consensus at the start of the year was pretty close to the 3.1% Homelet recorded at the end,’ he continued.[1]
Concluding, Mr Jagota said, ‘A big thing to take away from these figures too is that although rents are rising, they aren’t rising as quickly as even some of the experts think. As things are, the market is giving a good deal to both tenants and investors and policy makers should be cautious about pursuing any measures which could jeopardise that.’[1]
[1] http://www.propertyreporter.co.uk/landlords/last-year%E2%80%99s-rental-predictions-who-got-it-right.html