Rightmove – Election result to spark 2% house price growth in 2020
Rightmove predicts that the price of property coming to market in Britain will rise by 2% in 2020.
Rightmove believes that the election results will provide an opportunity to “release some of the pent-up demand in the spring, and for some modest upwards price movement”.
Annual price growth over 2019 stands at 0.8%, marginally above Rightmove’s previous forecast of 0% change, and December’s 0.9% fall is the smallest at this time of year since December 2006.
It added that sellers’ pricing power will be enhanced by a lack of choice for potential buyers, with the proportion of estate agent stock available for purchase at its lowest for over two years.
However 2020’s housing market is still expected to fall short of capacity, and Rightmove believes it can only return to full health “when Brexit is well in the past”.
Miles Shipside, director of Rightmove, commented: “The greater certainty afforded by a majority government gives an opportunity for a more active spring moving season, with some release of several years of pent-up demand. Given the Brexit track record to date, further political twists and turns should not be ruled out, though with a large majority there is a higher possibility of an end to the series of Brexit deadlines, and the prospect of an orderly resolution.
“Rightmove measures the prices of 95% of property coming to market, and we predict that buyers and sellers will on average see a 2% rise in those prices by the end of 2020. While this is over twice the current annual rate of 0.8%, it’s still a relatively marginal increase as it’s a price-sensitive market. There will be regional variations. London is finally showing tentative signs of bottoming out, and we expect a more modest price rise of +1% in all of the southern regions where buyer affordability remains most stretched. In contrast, the largest increases will be in the more northerly regions, repeating the pattern of 2019 with increases in the range of 2% to 4%.
“With much of the political uncertainty removed, we expect that the number of properties for sale will recover as more new sellers come to market, making up some of this year’s lost ground. However, property supply is still limited, with estate agents having the lowest proportion of properties available for sale in two years, and this will fuel modest gains in the national average asking price of property coming to market. The fundamentals remain sound with low interest rates, lenders competing to lend, high employment, and average wage growth outstripping house price growth and helping buyer affordability. The statistics for 2019 encouragingly show that the ‘have-to’ and ‘life-stage’ markets have been carrying on, and we hope that the more certain outlook would encourage many would-be discretionary movers to finally get off the fence.
“First-time buyers are the drivers of the market. Too many are struggling to save the necessary deposits, and not all of them want to buy a new-build home through Help To Buy. More ways of getting more people onto the ladder would help to limit rising rents, increase liquidity and transaction numbers in the housing market, and make the dreams of their own roofs above their heads a reality for many more of the younger generation.”
Source: Financial Reporter