Key Trends for Property Investors to Watch in 2020

By Jerald Solis, Director, Experience Invest

The new year invariably acts as a time for reflection, prediction and target setting. This is true for businesses, consumers and investors.

Jerald Solis

In 2020, this period has become a little more interesting; just last month the Conservative Party secured an overwhelming majority in the General Election, while at the end of the current month the UK will – as it stands – leave the European Union (EU). As such, after a long period of uncertainty and hesitancy, we could be about to witness widespread and rapid change across the country.

This is certainly true in the property sector. There is a palpable sense among many businesses that the coming 12 months will provide an opportunity to address pressing issues, allowing the market to make meaningful progress after a challenging three years.

But what changes are we likely to see? Here are my thoughts on some of the key trends that will shape the property market over the coming year…

Brexit to release pent-up demand

To date, there have been four different Brexit deadlines. It has already been moved from 29^th March 2019 to 12^th April to 31^st October 2019, and then to 31^st January 2020. But it now seems likely that the UK’s departure from the EU will be confirmed at the end of this month.

In December’s election, Prime Minister Boris Johnson campaigned primarily on the promise to “get Brexit done”; the majority his party won has strengthened his position to do so. Indeed, on 9^th January MPs voted 330 to 231 in favour of the Withdrawal Agreement Bill – the bill that will implement the UK government’s Brexit deal.

But what does this mean for the UK property market?

The prevailing sentiment among property experts is that once Brexit has passed, there will be an upturn in market activity. Buyers and sellers who had become immobilised by Brexit uncertainty may soon be sparked back into life.

In Q3 2019 Experience Invest surveyed more than 1,000 UK property investors, finding that just over half (51%) of the respondents were confident there will be an increase in property listings and sales once Brexit is complete. The majority (55%) also admitted they had paused on their investment plans over the course of 2019 as they awaited the outcome of Brexit.

Brexit now looks set to go ahead on 31^st January 2020. With this will come greater clarity and certainty over how investment markets will perform and what state the UK economy will be in – one would expect this to provide the foundations for greater activity in the property market over the next 12 months.

Property prices to grow, but probably not in London

Since 2010, the average UK house price has risen from £167,469 to £232,944. This impressive growth has come in a period that included the aftermath of the global financial crisis, four general elections, three new prime ministers and the Brexit saga.

This upward trend looks set to continue; according to a poll of 27 property market analysts carried out by Reuters, UK house prices are predicted to rise by 1.5%in 2020 and 2.3% in 2021.

However, there are sub-trends hiding within this data. Most notably, the way the London market is performing compared to the rest of the UK.

The aforementioned Reuters poll also suggests that prices in London will fall by 1.5% in 2020, which is lowering the overall total. In fact, this is a trend that has been prevalent over recent years, with prices in the capital stagnating or declining while other regions grow at pace.

Analysis of 2019’s data by Zoopla shines a light on this trend. It found that on average a property in London fell in value by £71.23 each day in the first six months of 2019 – by comparison, real estate in the South East (+£35.32), NorthWest (+£20.39), Wales (+£18.03), Yorkshire (+£12.37) and North East (+£6.97) was all on the rise, with the West Midlands leading the way (+£36.58).

This trend looks set to continue in 2020. In fact, regional house price growth could be spurred on further by the Prime Minister’s promises to reignite the Northern Powerhouse initiative – given Johnson’s party enjoyed much success across the North in December’s election, there is an onus on the Conservatives to reward its newer supporters with greater investment into the region.

New-builds to remain on the public agenda

Looking beyond the prospects for market activity and price growth, one of the defining property trends of 2020 will almost certainly be new-build developments.

The Housing Crisis remains one of the country’s most-talked-about domestic issues, with the shortage of available housing impacting on most areas of society.

As a result, successive governments throughout the 21^st Century have made bold statements and set bolder targets for increasing the country’s housing stock. And the new Conservative Government is no exception: it has promised to deliver a million new homes by 2025.

Only time will tell if the Government can reach this target. Evidence from the past two decades does not paint a particularly pretty picture; house-building has typically fallen well short of the levels proposed. This makes the upcoming Budget – taking place on 11^th March – hugely important; will Chancellor Sajid Javid unveil any major reforms or spending commitments that could fuel activity in the new-build space?

At Experience Invest we work closely with property developers and local councils to ensure private investment is made available for much-needed real estate projects. It will be interesting to see if the government can do more during the current five-year parliament to ensure there is more collaboration between the public and private sector when it comes to building more new homes across the UK.

Jerald Solis is Business Development & Acquisitions Director at Experience Invest. Experience Invest provides property investors in the UK and overseas access to exclusive investments across a variety of asset classes. The London-based company has been running for 15 years, working closely with developers and investors to deliver excellent real estate investment opportunities.