UK Property Market 2020
The UK property market had returned to prosperity with sales and new construction rising well. Sales forecasts from KnightFrank, Rightmove. Gov.uk and JLL all have painted a positive outlook.
However, the recent storms and floods are worrying some housing experts. It’s become one of the worst floods in the UK in history and it’s not over. More rain is expected this weekend and some rivers may burst their banks in the next few days.
Homeowners had recovered from previous floods in 2005, 2007, and 2015, yet last week’s Storm Ciara and this week’s Storm Dennis (5,000 homes flooded) might depress property prices.
Residential and commercial property losses are mounting.
2020 Forecast for UK Property Market Was Rosy
2020 was not forecast to be as strong as it’s performing currently, and some suggest a moderation or pullback might happen. But the 5 year forecast is repeatedly positive.
Nationwide Building Society reported house prices were up 1.9% higher from a year earlier, rising 1.4% in December. The average house price is £215,897 – up £615, or 0.5% higher than in December.
Brexit has been casting a shadow on the housing market and the UK economy, and perhaps homebuyers and builders can see light at the end of the tunnel. Even if turbulence continues, it appears the UK property market is coming back. Lower mortgage rates will add to a rosier UK housing forecast.
Stamp Duty and the Falling Pound
The weaker British pound and falling prices in the UK were drawing the interest overseas investors. For UK buyers trying to decide on the buy vs let option, the answer is to rent.
Some may be waiting for an expected cut to the stamp duty by Boris Johnson which had dampened the UK real estate market after it was introduced. Property purchases by Brits had dropped 16% year over year.
Some property company experts suggest that a £500,000 starting threshold for a Stamp Duty and Land Tax would be help in the over-heated market of London and the South East but could lead to a two tiered housing market. There are fears no one would buy in lower priced Scotland.
A good percentage of buyers are wanting and expecting a stamp duty cut from the Johnson government.
JLL offers its price outlook report, beginning cautiously but much stronger within 2 years:
House Prices to Rise 15%
JLL UK experts forecast house prices in the UK will grow 15% over the next 4 years. They support their outlook with forecasted 68% rise in GDP, 6.9% rise in household disposable income and a 2.7% increase in employment.
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This chart below from JLL, shows investment is strong in Berlin and Denmark, and not far behind, London UK. Investment in European multifamily properties rose 40% to 56 billion euros in 2018.
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PWC UK Economic Report 2020
In the recent PWC UK economic report, the company forecasts business investment to stay low, although 2020 national GDP levels will remain similar to 2019.
In their UK housing report, PWC cites mounting affordability issues for workers in London. They believe house prices will rise only 1% across the nation.
“Locked out of purchasing a home, many young people – commonly referred to as “generation rent” – have turned to renting. The proportion of 16-24 year-olds renting privately has risen from 51% in 1998/99 to 73% in 2017/18 and from 20% to 46% for 25-34 year-olds. ” — From the Pwc housing report.
Housing shortages, high deposit requirements, stagnant wages, should make many UK residents renters by necessity for the immediate future.
UK Rental Tenants on the Move
After the removal of Tenant fees, renters are ready to move. Demand in the Uk rose 7% overall and in London saw a 13% increase in demand for rentals. Asking rents in London are at a new record high of £817 per month.
UK National Average Asking Prices
According to research from Rightmove, within London, the zone 1 area suffered a 6.5% price drop year over year . The average price reduction across London was £8000. Average asking price is £628,458. Reports are that rightmove agents are losing their jobs.
Flat Rental Prices Levelling Out
Nationally flat and home rental prices rose 2.7% while rents in Greater London fell 1.6% in the second quarter. However year over year, London prices are up 3%.
Is this the Time to Buy a UK Property for Let?
The above charts would have us believe there are hotspots for price growth such as Midlands and Scotland.
According to Propertyhub, the city of Manchester, which has 30% rental properties, is worth a good look. It has a high student population which helps to prop up demand for rental flats. Liverpool as well is cited for high student populations. And Birmingham may have a rental housing shortage that could open it to price growth.
We’ll bring you additional insight into the UK’s rental housing market in future.
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