So many of our industry “talking heads” have been expressing wildly optimistic predictions for the UK property market in 2020 following Boris Johnson’s sweeping election victory.
The property industry is usually optimistic at the turn of each year. However, optimism this year was greatly surpassed by the sheer relief of avoiding a Corbyn Government. Many “experts” are predicting increased levels of transactions and even some price growth in 2020 as a result.
What is certain is that we seem to have entered a period where house prices in central London have stopped falling. It may be short-lived but it is certainly very welcome after 4 years of a market in the doldrums.
We are hearing reports of much increased buyer activity this year. It is too early to predict whether this will lead to more properties selling at stronger prices.
Is a strong conservative government good news for the UK property market?
Well, this depends largely on Boris Johnson and how he sees the property market going forward. Government intervention can play a big part in how the property market performs.
In recent years, there has been a significant increase in the taxation around foreign ownership of UK property. This played a big part in slowing the market down.
A conservative government led focus on preventing money laundering also had a not-insignificant impact on the prime central London property market.
This government has a stated policy of redressing the north /south imbalance in the UK. We are unlikely therefore to see changes in policy seen to favour the London property market.
All those clamouring for the Government to reduce stamp duty and property taxation obligations for foreign buyers and the super-wealthy may have a long wait.
Was 2019 the bottom of the market?
In the main, house prices continued to fall until Q4 2019, albeit at a slower rate. The volume of properties trading during 2019 was also low by historical standards.
Most of the larger apartments and houses which sold in 2019 did so as a result of sellers being more realistic. Asking prices were lowered significantly and expectations tempered. The property market functioned during 2019 but it seemed to be extremely fragile.
The picture is definitely very different for sellers now but for how long?
Post-election property market confidence has certainly increased dramatically. Several high profile transactions got over the line after the election result was known. This was largely to be expected. Some of the transactions negotiated during the uncertain period before Boris’s victory were worth holding onto. You would certainly struggle to replicate them from what we have seen so far in 2020.
This led to dramatic headlines about a recovering market. Very welcome after 4/5 years of doom and gloom but not altogether helpful. If sellers go back to being unrealistic with their pricing, this new dawn for the property market may disappear before gaining any real traction.
So what are the prospects for the London property market in 2020?
There is no doubt that for the time being sellers are going to be harder to negotiate with. The gap between buyers and sellers’ expectations has already begun to widen. As previously stated, this may stall the market before it really gets going this year. We are presently experiencing a period of euphoria that Boris will be able to steer us safely through choppy waters ahead.
However, the realities and difficulties associated with leaving the EU will definitely come into play as the year progresses.
A further increase in Stamp Duty has been proposed. If it comes to pass, it will dampen down any renewed sense of optimism for foreign buyers. Despite all the positive headlines that we have seen this year so far, nobody knows where the UK economy will be in a years time, let alone the property market. Until we know more about international and european trade agreements, it is difficult to visualise a sustained period of growth in the UK for the immediate years ahead.
So the most likely outcome for house prices during 2020 is minimal growth. This will largely be influenced by how many sellers try to sell this year.
So tread carefully in 2020 and don’t get caught up in the hype!
The early months of 2020 may not be the best time to be committing to a purchase unless you are able to negotiate a particularly favourable deal on a rare and exciting property.
It may be better to watch and wait for the time being and see whether better property comes to the market as the year progresses.
Reality will kick in around the impact of leaving Europe in the second part of this year. Then, we believe that sellers will need to be more pragmatic to get properties sold. We are far from out of the woods yet with prospects for house price growth in the UK. Any price increases that we do see early in 2020 may simply result from a short term supply/demand imbalance.
How many sellers list new properties for sale at realistic prices will be the main influence over prospects for 2020.
Most sensible buyers will remain cautious. During this time, those who need to move will drive the market. As will investors happy to speculate on parts of the UK where large infrastructure improvements are planned.
There will be owners who need to sell and who are realistic and sensible with their expectations. Finding these motivated and pragmatic owners will be key for buyers in the market this year.
So take your time in 2020 and be realistic as to where the property market really is.
Buy wisely, choose carefully and work with a buyers agent to ensure you pay a competitive price.
It’s never a bad time to be investing in London if the terms are attractive and you can find the right property.