Mark Mugliston, Residential Sales Manager at our Diss office, shares some good news on the wider property market and industry.
The dominant feature of the market in the last 12 months has been caution. Many potential sellers decided to stay put amid political and economic uncertainty, amid the Brexit debate and general election. Whilst the goings-on in Westminster last year put off sellers, demand among potential buyers remained relatively stable.
Low interest rates meant mortgages were relatively cheap for anyone finding a home within their budget. First-time buyer numbers were also surprisingly healthy. Debt, divorce, schools and new jobs still prompted people to move.
That led to prices rising on average across the country, if only by a little, rather than wholesale property price drops. The Nationwide Building Society says, on average, UK house prices went up by 1.4% over the year. The falls were mostly seen in and around London – the market most affected by Brexit uncertainty and from where a large number of our buyers come from.
What will happen in 2020?
The result of the general election has brought a level of political certainty and a clear route, in the short-term at least, for the Brexit process. Many experts suggest this could play out in the housing market with a release of some pent-up demand among buyers and sellers. People who put off making one of the biggest financial decisions of their lives may now feel more confident in making that step.
While that may inject some activity in the housing market in the first few months of the year, most commentators do not expect it to last. Before long, they say, the uncertainty and debate over the UK’s future relationship with the EU could mean more caution in the sector.
As a result, they are mostly predicting that house prices will rise by 2% from the start to the end of 2020. Only one market commentator, Henry Pryor, seemed to be forecasting a fall in prices this year in a BBC article about the state of the market. Everyone else, from mortgage lenders to those working for the main property portals, is expecting a modest increase.
These predictions are for a UK average, but the housing market must always be considered on a local level. House prices can be affected by anything from schools to new developments and transport links, sometimes recording different rates of change from street to street.
Richard Donnell, director of research and insight at Zoopla, suggests that the more ‘affordable’ cities for property, such as Glasgow, Belfast and Liverpool, could witness the biggest rises in prices in 2020, up by about 4%. The least affordable – London – could see prices rise by about 2%, he says.
Affordability, as in any year, is crucial to demand, particularly from first-time buyers. The eyes of the property world are firmly on the new government and its housing policies.
These policies need to focus on those first-time buyers, many of whom are struggling to save a deposit and may not want to buy a new-build home through the government’s Help to Buy assistance scheme. It will also be interesting to see whether we really do get a programme to actually build truly affordable homes.
The biggest challenge could simply be that housing is not at the top of the government’s priorities.
There may be more darkness than light in EU negotiations and some pinball politics to contend with again in 2020. That means buyers and sellers could play it safe and house prices could well hold steady again.