Ross Counsell, director at Good Move, the regulated property buyer, gives his predictions for the UK property market in 2020.
House prices grew incredibly slowly in 2019, with the political and economic uncertainty leading to rises of just 1% in England. There were larger increases in other areas of the UK, but the overall picture was bleak.
While it is unlikely that house prices will suddenly spike in 2020, the relatively stable political situation brought on by the Conservative majority, might lead to more significant growth.
The February Budget will no doubt affect the market, especially if there are reforms for first-time buyers, however it’s largely expected that confidence will somewhat return and house prices will increase. We estimate that the rise will be in the region of 2-3%.
The cost of renting could increase by an even greater rate. The number of letting properties available is currently rather low, which generally prompts a rise in prices.
The amount of homes on the market is still lower than it has been in previous years, so first-time buyers might struggle to find a suitable property. However, renewed industry confidence might lead to a surge in houses being listed. Some sellers will have delayed putting their homes on the market until it stabilised and 2020 could be the year they were waiting for.
However, if house prices do rise, many will continue finding it difficult to save enough money for deposits. The Lifetime ISA scheme is helping people to afford the initial lump sum, but more needs to be done to support those looking to get on the property ladder.
The positive news is that mortgage rates remain low. They may rise in 2020, but any increase is likely to be modest.
The UK is set to leave the European Union on 31st January and the impact of this move will depend heavily on the quality of the deal the government manages to secure. The outcome of a ‘no-deal’ scenario could well be a fall in house prices, but the uncertainty makes it hard to predict.
Our recent research found that three-quarters of Brits overestimate how badly Brexit has affected their local property prices, which proves how difficult its impact is to comprehend, let alone forecast.
While the economy is still languishing, the weak pound could actually make the UK property market more appealing to foreign investors, as their money will go further.
This, however, depends on current property owners being prepared to sell. Most will likely jump on the increase in market confidence and list their homes straight away, but others may hold on to see just how far house prices rise before making a decision. As such, the expected influx of homes being listed may come a few months, or even years, after Brexit, when sellers have a better understanding of the new economic climate.