As the political situation continued to cause uncertainty around the entire economy in 2019, the housing market has suffered and has been slow.
However, we may be on the crux of some stability. With the Prime Minister looking set ahead on a decision surrounding Brexit, although it is not the result many wanted, it will undoubtedly help with the uncertainty in the market.
So where can we expect the property market to go in the second half of 2020? Will we continue to see the market ‘treading water’ or will there be some upsurge in activity?
It depends on the location
For the purposes of this piece, we will be looking at the market assuming the coronavirus pandemic has passed. It is predicted that the property market will see increased growth in 2020 Q3 and Q4. However, prices are predicted to rise at a greater rate if you look outside of the UK capital.
More specifically, growth is expected to be at its greatest rates in the North and the Midlands. The major reason for this is the lower cost of property, specifically a reduced cost for commercial property with a number of large companies moving their premises up North.
Improvements over relocation
Much as we have seen over the past few years, homeowners are predicted to opt to renovate existing property as opposed to selling property and upgrading with the purchase of new larger property.
With the UK set to leave the EU, it is difficult to make this prediction with certainty, however we predict a greater number of homeowners will opt to sell after the dust has settled on the Brexit saga and we have greater clarity in the market.
To support this, a recent change in regulation has made it possible for homeowners to build a single storey extension to an existing property without planning permission.
With an estimated £5.5 billion expected to be spent over the next 12 months on home improvements, this is a large amount of spend that would have gone into the buying market but is being used elsewhere. This could create an issue in a shortage of suitable homes available on the market.
First time buyers will face difficulties
Affordability issues are predicted to persist in the market, with new build properties proving to be out of most homebuyers’ budgets. First time buyers had a relatively successful time in 2019, unfortunately this is not expected to continue going into 2020.
Homebuyers will face stiffer competition when it comes to the purchase of property. With fewer houses that are suited to the needs of the buyer, this because of the inability for older people to downsize and sellers ‘holding off’ of selling property until the dust has settled over Brexit. This has a knock-on effect of house prices increasing with growing demand relative to supply.
In fact, it is predicted that house prices will grow faster than wages over the coming 12 months. This may encourage homeowners to sell however, a good thing for the property market.
For homebuyers, although there are less options on the market, in terms of property prices, now is the time to buy. As the economy begins to adjust to a post Brexit market, prices should begin to bounce back, supporting homeowners looking to sell.
Buyers will be anticipating reforms hinted by Prime Minister Boris Johnson surrounding stamp duty tax, with the threshold being raised from £125,000 to £500,000. However, even if this is to come into effect, the expected house price rise will offset the saving made in stamp duty.
It is an unpredictable market
The capital has seen an average house price fall of 0.4% over the past year. Many predict that this could drop further, by as much as 2 percent if interest rates rise, as we expect them to. Although this is perhaps worst-case scenario for homeowners in the capital, as a buyer, you will be better off purchasing property in the North.
Whilst the headlines have been dominated by political uncertainty, with many assuming the turbulent economy will have had a damaging effect to the property market across the whole country, areas outside of the capital have seen house price growth, particularly in the North.
House prices are generally a reaction to a change of income in the area. With a number of big businesses moving their operations to the North through cheaper commercial space, combined with a faster growing economy than London, it is little surprise we are seeing a subsequent rise in house prices around cities such as Manchester and Liverpool.