Outlook for New Build House Prices in 2020

The year is drawing to a close and as we get ready to welcome 2020, we look at new build house prices and what may happen in the New Year.

Whatever your opinion on the issue of leaving the EU, it would be hard to dispute that the ongoing political uncertainty have made home buyers and sellers cautious. In February Mark Carney, the governor of the Bank of England, said that UK growth would be ‘guaranteed’ to fall in the event of a no-deal Brexit.

With a looming Brexit deadline, we then chuck into the mix the distractions of an election and Christmas; and the property market has a lot to contend with. During the course of this year we have been talking to estate agents around the country for their advice on new build house prices and, almost unanimously, potential buyers having been playing a wait-and-see strategy.

Robert Gardner, Nationwide’s Chief Economist had a another view stating in the Nationwide House Price Report in November “It appears that housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for most home buyers, elections are not foremost in their minds while buying or selling their home.”

Could the ‘Boris Bounce’ help new build house prices?

Accordingly, in our opinion, it could have been much worse for new build house prices, but the great British public are continuing to buy new homes and think of the long term. As someone once said about the UK property market, “land, they’re not making it anymore!”. So true. And so, if you have a stable income and are taking the long view, then new build house prices probably have only one way to go over time and that will be positive growth. According to the Land Registry UK House Price Index, as of October 2019 the average house price in the UK was £232,944, with prices having risen by 0.8% compared to the previous year.

On December 12th the Conservative Party, lead by Boris Johnson, gained a clear and decisive majority giving them a powerful mandate to “get Brexit done”. Consequently, with a new government in place “near term expectations suggest that a more stable trend is likely to emerge over the coming three months. Significantly, the twelve-month outlook is also now pointing to a pick-up in both sales and prices on a UK-wide basis” – say the RICS in November.

The ”Boris Bounce”, as it has been referred to, could lead to a boost in new build house prices in the short term at least. However, as we get further into 2020 there is the prospect of uncertainty creeping back should negotiations for a new agreement with the EU offer any threat of a no-deal exit. If the government is in any doubt over getting a deal, then an extension or no-deal will raise its unwelcome head; neither of which will do much good for new build house prices.

In the meantime, the governments Help to Buy (HTB) scheme will continue to support new build house prices but property developers will need to keep an eye on new changes. Buyers must exchange contracts by December 2020 to qualify for the current scheme after which HTB will apply to first time buyers only. Regional value caps will also apply and so depending where you are building, the new build house prices will affect the qualification for HTB. You can read more here.

We end this note with a wish to you for a Prosperous New Year and we look forward with positive hope as to the progress of new build house prices across the UK!  In the meantime, if you are looking to compare property development finance simply click here!

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