Some truth about the UK property market in 2020

We’ve all had a year that fits onto a sliding scale from somewhat dismal to shockingly bad. But that shouldn’t lead to us kidding ourselves about reality. It’s futile to push out fake news about a thriving economy and booming property market for the sake of convincing people that it’s business as usual. While some say optimism helps to boost a declining market, it ends up being a boy-who-cried-wolf situation where no one bats an eyelid when the market really does start to boom. I aim to cut through the misleading headlines to provide some solid advice on how to navigate the current market situation.

It’s not all doom and gloom 

When real estate articles continually emphasise the UK’s resilience in spite of all that’s thrown at it, it’s relatively true. But it’s important to stick to the data and not sugar-coat. The UK’s average house prices increased by 4.7% between January and September 2020 and London average house price hit a record high in September. And unlike in 2008, the average house price in the UK has continued to rise. 

However, if we’re calling this a “boom”, or a “mini boom” as some articles have opted for, we’re being unnecessarily optimistic when in reality what we’re seeing is continually steady growth. This isn’t new or exciting, it’s the UK’s repeatedly evidenced resilience. 

Looking ahead to 2021

So, taking into account that the UK property market is neither booming nor crumbling as we near the end of 2020, let’s also be realistic about the future. It’s likely that we’ll see a lull in activity following the stamp duty deadline in March and an increase in transactions as a result of the vaccine programme and the economy opening up again. Bearing that in mind, here are a few of my top tips for investing in the coming months:

• Don’t be fooled by the word “boom” - it seems as though every property business out there is predicting a boom and will continue to do so with every glimmer of optimistic news as we move out of 2020. Stick to the facts and figures and avoid the property market hyperbole. 

• Focus on the long-term - try not to get pulled into the intricacies of market trends. Especially in this weird time, it’s crucial to view your property investment in light of the long-term future rather than worrying about the minor ebbs and flows in response to the pandemic curve.

• Consider the diversity of your portfolio - investing in different property types will lead to more consistent cashflow and reduced risk. As you look to grow your portfolio, diversifying the property type will minimise the risk associated with certain market trends.

• Weigh up the fundamentals - location, connectivity, communication and outdoor space are just a few aspects of a property to consider when making the decision to invest. These should all be contemplated as part of due diligence prior to investment. 

I think it’s important that, as businesses, we don’t look foolish exaggerating the peaks in market trends for the sake of the hard sell. 

Finally, I would like to wish all my connections on LinkedIn a wonderful and safe Christmas. We all deserve a great one this year!

Sources:

https://www.ft.com/content/6fc2e391-6266-417b-a573-5d98b038f8b9 

https://www.halifax.co.uk/assets/pdf/november-2020-house-price-index.pdf 

https://www.home.co.uk/guides/house_prices_report.htm?location=london&all=1