What can we expect from the UK property sector in 2020? It’s a big question and, clearly, a difficult one to answer.
No one possesses a crystal ball that will show them exactly how the industry will evolve; how prices will fluctuate; how many new houses will be built; how regulation will change. That is not to say, however, that one should be a passive player in the market.
Particularly for those looking to buy or sell property in 2020, it is beneficial to identify and monitor key trends closely over the coming months to ensure informed decisions are made. So, with that said, here are three important events and trends to watch in the world of real estate this year.
Brexit and the Budget
Some trends are very difficult to predict. Others are much easier. For example, one can safely say that the first half of 2020 will be shaped by two Bs: Brexit and the Budget.
The Brexit deadline stands at 31st January. Meanwhile, the Government has announced that the Budget will take place on 11th March. It is impossible to look past these two events when making any predictions about what the coming 12 months will have in store.
But what impact will they have on the property sector?
Well, the passing of the Brexit deadline – which has been delayed three times already – could spark new life into the UK property market. It should alleviate some of the uncertainty caused by all the unknowns surrounding the country’s departure from the European Union, which over the past three years has prevented many people from moving ahead with plans to buy or sell property.
Indeed, late last year Experience Invest surveyed more than 1,000 UK property investors, finding that the majority (55%) had paused on their investment plans over the course of 2019 as they awaited the outcome of Brexit. What’s more, over half (51%) were confident there will be an increase in property listings and sales once Brexit is complete.
It would be wise, therefore, to watch out for a potential upturn in activity in the market once there is greater certainty around Brexit.
Meanwhile, the 2020 Spring Budget also looks like it will be particularly significant. The annual fiscal announcement – cancelled last year due to the election – is usually noteworthy, but this one takes on added importance given it is the first of a new parliament, the first under a new Prime Minister and Chancellor, and the first after the Brexit deadline.
The policies included in Sajid Javid’s speech will become clearer in the weeks leading up to the Budget. But already there have been suggestions that stamp duty could be reformed for both first-time and overseas buyers. Investment into infrastructure is also likely, as are spending commitments for new-build properties, but we will come onto that later.
Regional property price growth
Property price growth is another trend to watch this year. In fact, house price statistics are hard to avoid, given the wide range of sources publishing data on them.
Importantly, over the past ten years the average UK house price has risen from £167,469 to £232,944, according to Land Registry data. This impressive growth has come in a period that included the aftermath of the global financial crisis, four general elections, three new prime ministers and the Brexit saga.
Should we expect it to continue in 2020? The experts seem to think so; Reuters quizzed 27 property market analysts, finding that on average they expect UK house price to increase by 1.5% in 2020 and 2.3% in 2021.
But there is more to this trend than meets the eye. Specifically, there are notable regional differences in price growth.
Last year Zoopla released some data that put an interesting twist on how we view house prices. Looking at the first six months of 2019, it found that on average a property in London fell in value by £71.23 each day. Conversely, houses in the West Midlands (+£36.58), South East (+£35.32), North West (+£20.39), Wales (+£18.03), Yorkshire (+£12.37) and North East (+£6.97) all rose in value.
It underlines the importance of taking a more regional focus when assessing property price trends. And in 2020, it looks like many regions outside of London will outperform the capital in terms of house price growth.
Housebuilding to remain a key focus
Finally, from my perspective, 2020 is going to be a period with an intense focus on housebuilding.
The Housing Crisis – the lack of affordable homes across the UK – is a huge domestic issue. And the new Conservative Government will rightly place it high on its agenda for the new five-year parliament.
Already we know that the Tory Party is committed to adding 300,000 new houses to the property market each year by the time we reach the mid-2020s.
Only time will tell if the Government can reach this target. Evidence from the past two decades does not paint a particularly pretty picture, though; housebuilding activity has typically fallen well short of the levels proposed.
So, what can be done differently this time? In my opinion, the Government must look beyond spending commitments and investments into infrastructure – two things we are likely to see in the Spring Budget, as mentioned above.
There needs to be new systems and processes to encourage collaboration between the public and private sectors. This may also require financial incentives or even new technologies to enable government and construction bodies to work together.
At Experience Invest we work closely with property developers and local councils to ensure private investment is made available for much-needed real estate projects. It will be interesting to see if the government can do more during the current five-year parliament to ensure there is more collaboration between the public and private sectors when it comes to building more new homes across the UK.
Jerald Solis, Director, Experience Invest
Jerald Solis is Business Development & Acquisitions Director at Experience Invest. Experience Invest provides property investors in the UK and overseas access to exclusive investments across a variety of asset classes. The London-based company has been running for 15 years, working closely with developers and investors to deliver excellent real estate investment opportunities.