While no-one can predict accurately how the real estate industry in the UK will develop in 2020, there’s every reason to keep a watchful eye on the market to see how prices fare, whether new regulation will be enacted and how many new homes will be built.
It will help to identify and monitor key trends closely over the coming months to ensure informed decisions are made, especially for those thinking of buying or selling property this year. Four important trends are likely to be:
The passing of the Brexit deadline on January 31 could breathe new life into the UK property market. It should also lift some of the uncertainty concerning the country’s departure from the European Union, which has prevented many people from going ahead with plans to buy or sell property.
Experience Invest surveyed over 1,000 UK property investors late last year and found that 55% had stalled their plans over the course of 2019 as they awaited the planned outcome of Brexit. All the same, 51% were confident that there will be an increase in property listings and sales once Brexit has been completed.
The 2020 Spring Budget also looks as though it will have particular resonance. The annual fiscal report, cancelled last year due to the election, is usually headline news, but this year assumes greater importance as it will be the first of a new parliament under a new Prime Minister and Chancellor and the first after the Brexit deadline.
The policies to be included in Sajid Javid’s speech are as yet unclear, but there have been suggestions that stamp duty may be reformed for both first-time and foreign buyers. Investment in infrastructure is also likely, as are spending commitments for new-build homes.
Regional property price rises
Property price growth is another trend to watch this year. According to Land Registry data, over the last decade the average UK house price has risen from £167,469 to £232,944. This impressive growth has occurred during a period that included the fallout from the global financial crisis, four general elections, three new prime ministers and Brexit.
The experts think property prices will continue to rise. Property market analysts quizzed by Reuters news agency said on average they expected UK house prices to increase by 1.5% in 2020 and 2.3% in 2021. Yet there is more underlying this trend than appears on the surface. In fact, there are notable regional differences in price growth.
Zoopla released data last year showing marked variations in house prices. In the first six months of 2019, it found that on average a property in London fell in value by £71.23 every day, whereas homes in the regions all rose in value.
Property in the West Midlands fared best with an average increase of £36.58, followed by the South East (£35.32), the North West (£20.39), Wales (£18.03), Yorkshire (£12.37) and the North East (£6.97). And this year, it looks as though many regions outside London will outperform the capital as regards house price growth.
Housebuilding to be key focus
The lack of affordable homes across the UK is a national concern, and the new Conservative Government will give it priority in the five-year parliament. We know already that the Tory Party is committed to providing 300,000 new houses each year by the mid-2020s and it remains to be seen whether the Government will reach this target.
Evidence from the last two decades is not encouraging though; house- building activity has fallen well short of the proposed numbers. So what could make the difference this time? The Government has already proposed spending commitments and investment in infrastructure.
Perhaps there need to be new ways of encouraging collaboration between the public and private sectors. This may require financial incentives or even new technologies to enable government and the construction industry to work together to build the homes that are much needed across the UK.