What does 2020 look like for the UK property market?
With a great deal of political and economic uncertainty continuing in the UK, alongside high stamp duty and general lack of affordability; the property market in 2019 is certainly facing further challenges and turbulent times.
Here’s a look at some of the key issues facing the UK property market in 2019:
Brexit is still the obvious issue on everyone’s mind as we head into 2019. Last year, house price growth slumped due to uncertainty which resulted in prospective buyers treading water while waiting to see the outcome of Brexit. Those that are willing to put in offers are in a better bargaining position with little competition and sellers are more likely to accept first offers in case it is the only offer that comes in. As March approaches, the stagnant market is likely to continue until there is more certainty and clarification. It is predicted that the transition phase of Brexit will add to uncertainty meaning Brexit will continue to be a destabilising influence on the housing market well into mid and late 2019 and even beyond.
Recent changes to tax rules for buy to let properties
The recent new regulations on tax relief for landlords – the so called ‘landlord tax’, has hit the rental market in 2018 seeing subdued levels of rental uptake. Some landlords have had to exit the market altogether leading to a lack of new rental listings. This coupled with a heightened demand for rental property has seen inflated prices. This is expected to continue into 2019.
Strict lending criteria
The market will be further subdued in 2019 due to continuing strict lending criteria which has restricted both first time buyers from entering the market and existing property owners from moving. However, with regards first time buyers, that has largely been the case for first time buyers in major cities such as London. In other areas of the UK, first time buyers have been an active group of buyers due to the Government’s Help to Buy schemes helping young people buy newly built homes. Although this trend is likely to continue in 2019, it is unlikely to be significant enough to cause a growth in the market.
Properties will continue to go on the market because there is always the reason of death, divorce, debt and the requirement to move for work; but the market will continue to be subdued with many potential movers instead choosing to renovate or extend their properties.
The high cost of stamp duty will continue to discourage house moving but there is unlikely to be further stamp duty reform in 2019. However, data from the HM Revenue & Customs for the third quarter of 2018 show that tax revenues from stamp duty are down by 9 percent compared with the previous year, which could prompt the Government to make amendments in years to come.
In conclusion, with so much uncertainty to consider, buyers are treading water and waiting to see the outcome of political decisions in 2019. This will likely mean that national house price growth will come to a stand still but a fall in house price growth will be avoided due to a supply shortage.
Happy new year to all.
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