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House Market Predictions 2020: A Bounce Back?

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Have you been puzzled and frustrated by the economic uncertainty and the politics of recent times? Not sure whether house prices are rising or when the best time might be to put you home on the market? You’re not alone – millions have been in the same position.

Now, at last, the fog is lifting after the election and with Brexit underway. Buyers and sellers alike can now ‘get on with it’, which is good news for everyone.

That’s because more confidence encourages more buyers, which in turn means more sellers put their home on the market and more people move house.

Here are some house market predictions 2020.

Housing Market 2020: What’s In-Store?

There’s no substitute for speaking with estate agents who know local markets, sometimes street-to-street: but there are plenty of ‘large scale’ price forecasts for the whole UK, too.

According to respected estate agencies like Savills and Jackson-Stops, and the Halifax mortgage team which compiles the famous monthly price index, house price rises across the UK will be between one and two per cent in 2020.

A business consultancy, the Centre for Economics and Business Research or CEBR, feels there could be a larger rise as buyers become more confident: and it says there could be 10 percent more people moving house in 2020 than in 2019.

This means sellers should prepare their homes for sale early spring when more buyers are likely to be looking for property than in recent years – this could be a busy 2020.

House Prices in the Regions

National figures always mask significant regional variations.

Savills, for example, says the Midlands will see three per cent price rises in 2020, with the north of England and Scotland not far behind; the southern half of England, by contrast, is predicted to see no noticeable house price growth at all over the year ahead.

In London specifically there may even be minor price falls: an agency which sells homes within the M25 only, Chestertons, warns of a minor one per cent dip.

But the market may get a boost if stamp duty changes. At the moment the duty on some homes, especially larger expensive ones in areas like London, deters some purchasers.

Lowering some stamp duty, as the new government has suggested, could encourage buyers and add to the ‘busy-ness’ of the market. Watch this space.

2020 Could Be A Good Year for First Time Buyers

House prices remain high – the UK average now is £231,000 according to government data – but 2020 may be a great opportunity to get on the ladder.

The current Help To Buy equity loan scheme ends in March 2021 and although there will be a replacement, experts anticipate a rush as 2020 progresses.

And if you’re a first-time buyer in England or Northern Ireland, you still pay no stamp duty on homes up to £300,000; for properties up to £500,000, you pay no stamp duty on the first £300,000.

What Should Tenants Watch For?

There’s good and bad news in the private rental sector, depending on whether you’re a tenant or a landlord.

Demand for rental homes is growing, and fast: government figures show that in 2010 over half of adults aged 25 to 34 were homeowners but by a year’s time that is predicted to be just 38 per cent, mostly thanks to the increasingly unaffordable prices of homes on sale.

But the number of rental properties is reducing – at least slightly – because landlords are being taxed more heavily than before; as a result, some have sold up.

ARLA, a letting agents’ group, says rents rose four per cent in 2019 thanks to a cut in available properties leading to more competition between tenants. This is likely to be repeated in 2020, especially in big cities.

Housing Market Outlook 2020 – Things to Watch Out For

Here are some other things you shouldn’t forget.

Interest Rates

There may also be interest rate rises in 2020, which normally happens when an economy becomes stronger. The current Bank of England base rate, on which mortgage interest rates are based, is 0.75 per cent and experts say this could go up to 1.25 or 1.5 per cent.

This means mortgage interest rises too – monthly payments by borrowers will rise in turn.

So if you’re getting on the property ladder with a fixed rate mortgage, consider doing it sooner rather than later. If you’re already an owner, this might be the time to remortgage (that is, move to a new lender) and get a more competitive interest rate.

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New Rules

There are two more things to watch for. There will almost certainly be new rules for how we buy homes announced in 2020, aimed at making the process simpler and more transparent; likewise, there may well be new tenant-friendly rules for the private rental sector too. The government has promised these changes, but with no details yet.

In other words, there’s a lot happening in 2020. Happy New Year!

One thing’s for sure, the more you know about an area you’re looking to buy or rent in, the better. Get a property report to ensure you’re clued up.

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Last Updated: July 30th, 2021