Those with a close eye on the UK’s property market will be interested to discover that house prices are set to climb at a faster pace in 2020, when compared to the previous year.
Values are already showing signs of improvement, with the latest data recorded by HM Land Registry highlighting an impressive 2.2% rise in the average UK property price in the year to November 2019. The figure recorded is significantly higher than the previous month, when prices increased by 1.3% in the year to October 2019.
Overall, UK house prices ended the year 1.4% higher than at the start of 2019, according to Nationwide building society.
What’s more, Savills has reported that the total value of UK housing stock has increased by £190 billon (2.7%), reaching a record-breaking £7.29 trillion.
What’s causing UK house prices to rise?
According to Rightmove, a ‘window of stability’ in the wake of the general election results has restored confidence in the market, with sellers and buyers both showing signs of positivity.
A wave of activity was record immediately after the election results, with the number of sales increasing by 7.5% year-on-year between 13 December to 15 January.
Miles Shipside, a director at Rightmove commented: “These statistics seem to indicate that many buyers and sellers feel that the election result gives a window of stability. The housing market dislikes uncertainty, and the unsettled political outlook over the last three and a half years since the EU referendum caused some potential home-movers to hesitate. There now seems to be a release of this pent-up demand, which suggests we are in store for an active spring market. The early birds are on it, with over 1.3 million buyer enquiries to agents since the election, up 15% on the same period a year ago. Some buyers are even further ahead and have snapped up a property already, with the number of sales agreed up by 7.4% on this time last year.”
House price predictions for 2020
Experience Invest recently outlined the key trends for property investors to watch in 2020. It’s important to note that Brexit’s impact on UK house prices has been overestimated, leaving plenty of scope for investors to take advantage of opportunities over the next 12 months.
Predictions from the newly released UK Cities House Price Index by Zoopla and Hometrack expect +3% house price growth with ‘continued above average growth in the most affordable regional cities’ throughout 2020.
The Index expects London property prices to increase by 2% over the next 12 months.
Referencing its forecast, the report stated: “The outturn could be higher and largely depends upon the level of pent up demand that returns to the market in Q1 and the impetus for higher prices given the recent reduction in available supply. The new Government was silent on any changes to stamp duty during the election campaign. Any changes that reduce stamp duty would provide a short-term boost to market activity and prices.”
And it’s not just property values which are on the rise. The most recent HomeLet Rental Index (December 2019), has shown that rental prices have risen by 3.5% year on year, with the average price of a new tenancy now £953pcm.
Despite a record 10,000 Build to Rent homes built across the course of 2019, a lack of affordable homes for potential buyers and renters means that a significant undersupply of housing still needs to be addressed.
A lack of housing in key UK town and cities will continue to underpin rental returns for property investors for many years to come.
Follow this link more information about the expansion of the UK’s private rental sector.
Opportunities for overseas investors
A lot has happened in the years since the UK decided to end its EU membership in June 2016. For overseas property investors, the drop in the value of the pound has been one of the most significant consequences of the referendum’s results.
However, with a majority conservative government now in place and the latest Brexit deadline fast approaching, sterling is expected to strengthen as political clarity is achieved.
The UK is home to one of the world’s most stable property markets and with prices on the up and the imminent recovery of the pound, overseas buyers must act fast to make the most of favourable exchange rates currently available.Potential changes to Stamp Duty tax for overseas purchasers is another incentive for international investors to act now to secure the best deal.