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What could 2020 have in store for UK property investment ?

What could 2020 have in store for UK property investment ?
December 31, 2019 Hugo Fairey

As we begin the New Year, we outline some of the factors that could have a positive effect on UK property investment in 2020.

Brexit 

It is no secret that Brexit has had a massive dampening impact on investment decisions. Consumers and businesses have behaved as if we are about to enter a recession because of a cloud of uncertainty that has hung over the UK economy.

With certainty restored, a significant economic boost could now follow. This could come from a wave of foreign investment, as well as domestic business leaders signing off investment plans which have been put on ice for the past three years.

As a result, there is a good reason to believe that the UK will exceed the 1.4 per cent growth rate for 2020 predicted by the IMF. Also recently The Centre for Economics and Business Research (CEBR) said that ‘despite Brexit, the French economy failed to overtake the UK’ in the three years since the EU referendum. On current trends, its projections found, Britain’s output should be ‘a quarter larger than the French economy’ by 2034 and that Brexit ‘will not damage UK’s status in the world’:Britain looks poised to remain a dominant global economy.

Investment Growth 

We have already seen how quickly confidence can rebound with the pound surging to its highest level since June last year and the FTSE 250 hitting record highs. Shares in almost every property related public limited company jumped significantly by around 10% in the immediate aftermath of the election. A recent survey carried out by The Times reflecting the views of economists from the City’s leading think tanks and universities revealed that more than half of the respondents said that investment would grow considerably over 2020

Property Market 

Home mover activity and confidence have been dogged by political uncertainty since the 2016 referendum. Many buyers and sellers have put their lives on hold, waiting for an outcome to the political controversy playing out in front of us. The considerable pent up demand, which has been waiting for Brexit clarity, could now be released.

None the less, most predictions around house pricing are cautious, RICS  predicts modest growth, opting for 2 per cent growth in 2020. Halifax, predicts between 1 and 3 per cent growth. Zoopla estimates 3 per cent. Savills is more sceptical with a 1 per cent prediction.

Though the short-term forecasts are timid, analysts are taking a bolder stance on the long-term view. Knight Frank predicts mainstream UK prices will grow by 15 per cent by 2024, while prime central London prices will rise by 18 per cent.

New Government

With the new Conservative government comes a wave a new planning and house building pledges, which if adhered to could create opportunities for property investors, some of the proposals include :

  • New homes pledge: Build one million new homes over the parliamentary session and do more to help first-time buyers and protect renters
  • A First Homes initiative that will provide a 30-per cent discount for those people – as well as for crucial workers – potentially saving them tens of thousands of pounds. Homes sold under the initiative which will be consulted on next year would then remain discounted in perpetuity so that future first-time buyers can also benefit.
  • The government has recommitted to its Affordable Homes Programme to build hundreds of thousands of new properties while also launching a reformed Shared Ownership scheme which will be easier to understand than the current one.

All investors should be aware that their capital will be at risk. The value of investments can go down as well as up. Forecasts are not a reliable indicator of future performance. Brickowner investments are not covered by the Financial Services Compensation Scheme. There is no recognised market to sell Brickowner investments. Brickowner investments are illiquid. Always seek the advice of a qualified independent investment advisor with any questions you