The future is unfortunately unknown, but when it comes to property we can at least make some educated predictions. Here is what 2020 is looking like for the UK’s property market.
The Effects of Brexit on The Property Market
Over the past few years the ongoing Brexit uncertainty has had a negative impact on the property market. People have been cautious to sell or buy until getting some clarity on what was happening.
Now there is at least some short-term clarity with Brexit there could be a release of pent-up demand from buyers and sellers. This new-found confidence could result in increased activity in the property market and house price growth during the first few months of the year. However, if the uncertainty around the UK’s relationship with the EU continues after the country has left the economic union, the property market could return to its cautious ways.
The ongoing Brexit caution continues to affect the weak pound. This may actually have a positive impact on the property market; as foreign investors will turn more to the UK knowing their money will go further.
Experts are currently predicting an average UK property price increase of 2% during 2020.
First-time buyers may continue to struggle to get on the property ladder. With a smaller number of homes on the market, many first-time buyers are finding it difficult to source a suitable property.
If industry confidence causes house prices to increase, so does the deposit required. This is already a challenge for first-time buyers, and although government schemes like the Lifetime ISA is helping, more needs to be done.
Low Mortgage Rates for Property Investors in 2020
Mortgage rates may rise slightly during 2020, but are still expected to remain low. This is good news for property investors and owner-occupiers alike.
As well as good mortgage rates, there is other positive news for mortgages. Banks are likely to offer even longer mortgage terms, increased upper age limits and cheaper ten year fixed-price mortgages. The Bank of England may also relax borrowing limits in response to rising house prices.
With people finding it even more difficult to get onto the property ladder in 2020. Demand for rental properties is expected to increase. There is currently a shortfall in the number of rental properties across the UK, which will also have a positive impact on rental yields.
The Royal Institute of Chartered Surveyors predict that average rents across the UK will rise by 2.5% during 2020.
Property expert Kate Faulkner gave this advice to buy-to-let landlords for the upcoming year; “Any landlords so far who have not been increasing rents in line with inflation need to seriously start thinking about doing this next year and it’s a good idea for landlords to also think about having insurance for non-payment of rent.”