Well he did it. Whatever your thoughts about Boris Johnson, he did not have to pack and leave No 10 and in fact his comfortable majority (the largest Tory win since the 1980's), could bring some long awaited stability to the property market – but will it?
Certainly the earliest predictions after the polling booths closed, were that property prices would rise as there will now be a renewed confidence and stability in the market. As the dust settled, Rightmove predicted that there would be a 2% upturn in the market. Regional statistics – particularly in the north east – show that this increase in prices could be up as much as 4% in 2020.
What Is the 'Boris Bounce'?
Although it is still early days, the main point is that the results of the election have dispelled all the uncertainty about the government, but have introduced another over Brexit - although it will now definitely happen. Many estate agents are hoping for some New Year fireworks – in the property market, as well as those welcoming in 2020. There is optimism that will be a much hoped for increase in property prices and this potential boost to the property market is being called the 'Boris Bounce'.
In a nutshell the mood in the property market so soon after the election is one of cautious optimism.
Certainly the optimism comes in different shades of colour according to the regional area. The London market is still slipping and last year, 45,000 people relocated from London to the Midlands as the transport network is good and of course you can buy much more property for your money away from the capital. The HS2 railway linking London with Birmingham, the East Midlands, Leeds and Manchester will continue to push house prices up in these areas.
The housing market definitely did better in the north this year and the highest growth was recorded in the north-west in September – 2.8%. Yorkshire also recorded an increase of 2,2%. There were several particular towns that fared well too and these were Middlesbrough (7%) and Newcastle (6.7%). With this in mind, several northern estate agents believe that the next three months will be a busy time on the northern property scene.
The property prices in London have been dropping since March 2018 and in the last year this was on average by 0.4%. Savills believe that this figure will continue to fall through 2020 by another 2%. In sharp contrast, Rightmove however disagrees, as its experts believe that the property market in the capital has now bottomed and that by early 2020 the prices should start to recover.
How Much Will Property Prices Rise in 2020?
Rightmove believes that the growth in 2020 should be 1-1.5%. In real terms, a 2% increase in property prices mean on average, an extra £6,000 on the price tag of a property. Rightmove has also stated that the London property market actually bottomed just prior to the 12 December election. James Hyman Head of Residential at Cluttons is confident that the London market will surge rather than bounce in early 2020. He believes that there will be an 'avalanche' of properties going on the market as sellers have been unable to do anything for the past four years because of falling prices.
The average price of property in the capital is £600,000 and two major uncertainties have now gone to encourage buyers– there will be a Conservative government for the next five years and to quote the Prime Minister 'Brexit will be done'. Other experts feel that whilst sellers will be seeking a 'Boris bounce' on property prices, buyers will still be after a pre-Brexit bargain. Only time will tell.
If you are wondering whether to put your property on the market in early 2020, the advice is... yes do it. It is best to get several valuations before you do though, because it is important to have the property accurately priced. If you do put your property on the market early in the year, there is traditionally less competition – so you could do well.
If you are wanting to buy on the other hand, it is well worth searching for your ideal property before you take the Christmas decorations down. Don't rely on online sites, it is well worth popping in to local agencies and discussing what type of property you are after so that they can send you an alert when something new comes on the market. Broaden your price bracket too as you may well be able to bargain hard with sellers whose property has been on the market for a while - and yes, make them a hard offer, because you can only gain by doing so.
How Will First Time Buyers Fair in 2020?
One section of the property market that could do well in the current situation is the 'first time buyer' sector. As well as some really good bargains to be had, mortgage brokers have some really good deals on offer to help kick start the market and on the whole, borrowing l rates are low although this is expected to change as Brexit looms.
A number of experts feel that the governments Help-to-Buy scheme is flawed and needs an overhaul. At present, it helps first time buyers with purchasing new properties and it has been said that in reality it benefits property develops. With such a shortage of new properties, many feel that the scheme should be widened to include re-sale properties too as this would help a larger group of first time buyers.
The market is looking good for buy-to-let purchasers – again because there are some bargains to be found on the market. This sector of the market did however slump by 1.5% in 2019, because of the introduction of many new restrictions. A sector of the market that is unlikely to record any growth in the short term is that of foreign buyers as they will be faced with a 3% in stamp duty. Uncertainty over Brexit will also have an impact on foreign investors.
2020 Budget and the Property Market
Of course, in his Election campaign, Boris Johnson did mention that stamp duty would be scrapped for house buyers with properties of under £500,000 but in reality this is unlikely to feature in the forthcoming February Budget. Experts do predict that there will be a cut in base rates and of course Brexit could still have a huge impact – depending on what trade deals are secured in the forthcoming months.
In reality, if you are looking to buy property in 2020, it is likely better to buy sooner rather than later a property prices will go up – especially in areas where demand outstrips supply. There is a noticeable shortage of new properties too which is compounding the problem as many people are forced to move because of work.
With thanks to Chris Stevens for this article.