The London Property Market in 2020 – what’s ahead?
We’re now ending the first month of 2020 and one of the main topics of discussion is the London Market with Brexit on the horizon. There have been a lot of uncertainties but after the recent conservative election victory, there is now an element of certainty in so much as we know that sadly Brexit will definitely be happening – and in just a few days time, too.
So with Boris Johnson winning the election, what will the effect be on house prices in London and on the London housing market? Will there be a Brexit induced financial crisis? Will our interest rates skyrocket, leading us into a new housing crisis? Are we, in fact, heading for a period of house price growth and, for those looking to buy a home in the capital, is it in fact better to invest sooner rather than later?
According to Rightmove, throughout last year buyers were attracted to the regions outside of the capital, particularly the North and Midlands. The reason for this was the comparatively low cost of housing further afield from the startlingly high prices of London. Until now, buying a house outside Central London was financially better for first-time buyers, and it seems this may continue to be the case, as some industry sources are starting to believe that the market in Greater London and around the area showing early signs of a mini-boom. The prices in London could even rise to 3%, faster than any other region throughout the UK. Of course, this raises house prices even further and in particular, for first-time buyers, they can only be afforded with the aid of increased wages or the use of Government benefit schemes like the ‘Help To Buy’ initiative: which is actually due to end this year, potentially widening the affordability gap even further.
Now of course we must take the general election and the looming certainty of Brexit into consideration, with most sources feeling certain that there will be no immediate boom or upturn as everyone waits to see what the exact effects of Brexit will be. The CEO of Millbank, Paul Higgs stated that “As with many property-related matters, this (the election result) will likely be felt more significantly in London than it will be through the other regions of the UK. There is a slight ‘lag’ in the property industry, as a high proportion of the value of its investment and development is based in the capital. The rest then spreads to the other regions.”
What this means is that London bears the brunt of any market boom or crash, before the rest of the UK. So it’s reasonable to expect that any industry ‘bounce’ – in particular within the housing market – in the coming months will be more notable in London than in other parts of the UK. Commentators are expecting to see a drop in house prices overall by around 1.7% for the first quarter of this year, with the hope of a then increase of 3.7% after April.
From an article from the Insider, Lawrence Bowles, Senior Research Analyst at Savills said that “Affordability constraints in London and the South East will cap potential price growth over the next few years. By contrast, prime central London – the most expensive core of the capital – now looks relatively good value on a world stage. We expect to see five-year growth totalling around 20%.”
This all sounds good, and many are stating it’s thanks to the ‘Boris Bounce,’ but with pricing increasing in this manner, the hardest thing to get for many people according to Consumer Research from Lloyds Bank would be raising a deposit. So what does this lead to?
With the new planning laws now in effect nationwide so that you no longer need a full planning application for a single-storey rear work, you have much more freedom to extend within your own property boundaries.
So rather than move, more and more homeowners are instead investing in the property they already have. If this trend continues, it will have a knock-on effect across the whole housing market, including in the Greater London area.
Taking into consideration of average prices after the general election, getting a property can perhaps be daunting, but there are many things to help you achieve your goal.
This is a tax-free savings account that for every £200 put in, the government would give an extra £50. One thing to note is that there is a limit of £3,000 that can be paid to you which would then go to your solicitor.
This is a loan where the government will give you 20% of the value of the home or 40% if you live in London. After a 5% deposit has been put into place and you have a mortgage, you can use the loan to buy a new build property. Act fast though – it’s due to end this year, unless the Government plan to give the beleaguered housing market a post-Brexit boost by extending it.
This is another scheme set by the government for anyone aged 18-39. It gives you the chance to save money tax-free and get a bonus of up to £32,000 towards your first home. You can save up to £4,000 a year and the government would add 25% each year.
Owning a fair share of the property with a housing association means that you can buy a part of the house and pay rent of the remaining amount. You can buy anything from 25 to 75% of it but only for certain properties.
For those in the capital of London, first buyers have the priority to put forward a deposit on new-build homes within the first three months for up to £350,000 before any overseas marketers can purchase the properties for themselves.
The London house prices are unpredictable and can go in favour for yourself or for no one apart from businesses. According to Zoopla, they reckon the market would drop by another 2% next year and if that was to happen it would make affording a mortgage even harder slowing the market down even more.
So really, the best time to get a house for a first-timer is now and these are the areas you should be looking at:
- Tower Hamlets
- Barking & Dagenham