2020 UK Property Market Predictions

With the New Year approaching, the dust settling from the General Election and the task of completing Brexit, we set upon the 2020 property market with relief, confidence and a slight sense of certainty back in the market. With the Conservatives back in power with a majority and housing being on their agenda, it will be interesting to see how this, and the following Tory years, play out.

I thought I would share my 2020 predictions so I can look back at the end of next year with interest and see how far off or close I was. So, my predictions are as follows:

SECTION 24 EFFECT

Section 24 has gradually been introduced since April 2017 and has already led to Landlords exiting the market due to the tax implications. I believe we will continue to see this and an increase in numbers because the mortgage interest relief ceases completely come April 2020. (At the moment it is 25%). This will lead to a shortage of supply in rental properties, therefore, increase the demand, which should effectively push prices up. We will also see more and more investors purchasing in the form of limited companies to capitalise on the tax benefits.

PROPERTY PRICES

I think overall we will see a marginal UK house price increase of around 1-2% as we now have certainty back in the market, but with the process of Brexit still ongoing, I believe we won’t see much higher than this. However, even though the UK figure is conservative, I think there will be vast regional variants, for example, I can see Liverpool experiencing a 4-5% increase due to the attractive property prices and high demand along with continual improvement of their already positive fundamentals.

RENTAL PRICES

I am going to predict a conservative UK increase of 2% increase in rental prices and this is mainly because I do not foresee UK incomes and inflation increasing too much which has a direct correlation to Rental Prices. The Office for National Statistics reported Median weekly earnings for full-time employees increased by 2.9% in 2019 but in real terms are lower than a decade ago due to inflation and I see much of the same for 2020.

MORTGAGES

The mortgage market is becoming ever more competitive and especially with Limited Company products due to more and more investors purchasing in a Limited Company. Therefore, I predict we will see more products come to the market (especially LTD company products) along with more competitive rates across the board. My personal preference for any investment purchases I make next year will be to lock in a 5 year fixed rate to give me certainty and peace fo mind.

LOCATIONS TO LOOKOUT FOR

I think Manchester and Liverpool will continue to be part of the front runners next year but I predict the next 3 inline to begin to take off in respect of capital growth and demand will be:

• Leeds (Hometrack: 3.4% Growth Oct 18 - Oct 19) - It has the fastest-growing population of any UK city outside of Manchester and nearly ￡7 billion of development in the pipeline, so demand is huge for one of the largest economic centres outside of London. The incredible regeneration of the South Bank area that aims to double the size of Leeds City Centre shows that redevelopment is a key driver for Leeds. This city definitely has a massive part to play within the Northern Powerhouse plans.
• Sheffield (Hometrack: 3.1% Growth Oct 18 - Oct 19) - Placed at a slightly earlier stage in the property cycle means that prices remain attractive in comparison with other city centres and so do yields. Sheffield’s local authority seems to be targeting demand with incredible amenities with ￡480 million spent on regenerating Sheffield’s shopping district. Definitely a city to get into before it moves along the property cycle where prices begin to increase and the yields begin to decrease.
• Nottingham (Hometrack: 3.4% Growth Oct 18 - Oct 19) - This is a city that I have had on my radar for nearly 2 years now as it has great fundamentals and potential. Its infrastructure is incredibly well-developed and offers opportunities in and around the city centre and provides direct access to many key destinations with its central location. It still has affordable prices and strong demand from students and working professionals. Nottingham is also benefitting from regeneration, with intu Broadmarsh being an example, to help serve the rising demand.

FINAL THOUGHTS

I think next year will be a great year for property investing and, if done correct, you will be able to reap the rewards. I believe if you decide on your strategy and invest confidently with it, then you will do well. If you manage to get in buy in the up and coming areas then you will definitely see great benefits as they move along the property cycle.

At Track Capital, we are always on hand to offer advice based on your strategy and introduce you to properties that will fit your criteria. Please feel free to reach out to me to discuss my predictions and anything property related as I will always find time to talk property and remember.....the best time to invest in property is yesterday.

Tobiano Mancuso - Director - Track Capital