Now that we’re past some of the uncertainty, there are higher hopes for the property market in the UK in 2020.
Rightmove are predicting that the average house price will increase 2% throughout 2020, with the largest rises being in the North.
Why may house prices increase?
The majority government result in December and following Brexit in January have caused more certainty meaning people are increasingly comfortable to buy or sell property.
It’s expected that the years of uncertainty over Brexit may be released in a back log of activity in the market occurring in 2020. However, in 2019 there was a 3% decrease in sales, and the number of homes added to the market dropped by 8%. This means that there is an ongoing problem with supply and demand; there’s more buyers than there are sellers.
With the 2% expected rise in prices, which is over double the current annual rate of 0.8%, the increase in property prices is still quite small.
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What about London?
Since the referendum in 2016, it’s expected that the property market in London will have its best year. Prices are expected to increase about 1% in all southern areas where we’ve found that affordability for buyers is toughest.
It’s thought that the bounce back in London could be rather rapid, while demand increases so sellers put their properties on the market.
The affordability issue
It isn’t expected that stamp duty will decrease in the Budget coming up in February, so affordability for buyers is likely to continue being an issue.
One way this can be helped is by the government providing more help for first-time buyers. If more people are on the property ladder, it’ll help combat rising rental prices, increase liquidity and cause a rise in the number of homes bought.
A 2% rise in house prices isn’t drastic by any means, so first-time buyers shouldn’t be impacted too much. It also roughly matches the increase in annual wage on average. Furthermore, if the Budget in February includes reforms for first-time buyers, it could provide a boost to the UK market in the not too distant future.
What about mortgage rates?
You probably know that mortgage rates have been low recently, meaning that if buyers can afford a decent lump sum for a deposit, they won’t be paying too much interest in their monthly mortgage repayments.
But are these rates expected to remain low in 2020? Fortunately, the answer is yes. There isn’t expected to be a drastic change to mortgage rates in this new year. This means that buyer’s shouldn’t be too put off by their repayment amounts when investigating which mortgage plan is for them. Additionally, if interest rates are lower, buyers are more likely to be able to make over-payments and therefore cut down the length of their mortgage.
It is possible that mortgage rates increase, but if they do, it’s predicted that it will only be marginal.
What do you think?
We’d love to know what you think. Have you been waiting to move until the property market settles? Are you a first-time buyer waiting to see what the February budget may bring? Let us know in the comments below!
I began writing for Property Press Online in October 2019. Particular areas of interest are housing market news and new developments in the market.