Following the resounding Conservative victory in the December 2019 general election and the UK’s withdrawal from the EU on January 31st 2020, the British property market is looking to the future with more certainty than it has had for some time.
There are still many questions to be answered with respect to the UK’s ongoing relationship with the EU, but there is also cause for investors to feel positive about the coming year, particularly where the housing sector is concerned.
House price growth was relatively subdued in 2019 – largely because of the uncertainty associated with Brexit – but there were still significant gains being made, particularly in regional locations. Liverpool and Cardiff were among the cities where housing stock rose in value last year.
Looking ahead to 2020, the fundamentals are in place for consistent growth. Knight Frank has forecast price increases of 2% across the UK for this year, partly driven by the release of pent-up demand that has accumulated in recent years.
The firm also predicted that prices will rise by a total of 15% between 2020 and 2024.
Demand for property
The ongoing imbalance between the need for living space in the UK and the supply of available housing looks set to continue in 2020. Last year, rental demand rose by 8%, while supply fell by 4% compared to 2018, according to Zoopla.
This is a long-term problem that poses a challenge for the government and the housing industry, but for investors, the demand/supply dynamic does have some positive implications.
As well as minimising the risk of void periods for owners, strong demand for rental property fuels yields and increases scope for landlords to charge higher rents.
The Royal Institution of Chartered Surveyors has predicted that rents will increase by 15% between 2018 and 2023.
Property expert and industry commentator Kate Faulkner told the Residential Landlords Association: “As far as 2020 goes, forecasters tell us that rents will do quite well. Any landlords so far who have not been increasing rents in line with inflation need to seriously start thinking about doing this.”
If you’re considering a UK property investment this year, contact Experience Invest to find out more about current opportunities and get some one-to-one advice.