The property market gave a gasp of relief in December as the election pointed to the first clear sense of direction that the UK has seen in over three years.
However, the interest in new build property saw a dramatic decline, with sales falling nearly 20%. According to HMRC data, of the 92,152 sales received for registration in November 2019, there was a 19% fall compared with November 2018.
Experts are busy theorising that the unexpected rise in house prices could deter First Time Buyers, who account for a large percentage of new build purchases.
Property prices surged 4% in December, according to the Halifax House Price Index, the biggest monthly increase of 2019. Although the so-called Boris bounce can’t rumble on forever, but it could be a harbinger of higher prices to come.
“Looking ahead, we expect uncertainty in the economy to ease somewhat in 2020, which should see transaction volumes increase and further price growth made possible by an improvement in households’ real incomes,” said Russell Galley, Managing Director of Halifax. “Longer-term issues such as the shortage of homes for sale and low levels of house-building will continue to limit supply, while the ongoing challenges faced by prospective buyers in raising deposits will serve to constrain demand. As a result, we expect a modest pace of gains to continue into next year.”
Nonetheless, a small bump in prices could nudge First Time Buyers off the property ladder. First Time Buyers were out in force in 2019 thanks to stagnating prices and rising wages. However, a recovery in price growth could slam the door on homeownership for many.
“Financial markets benefitted from the well-publicised ‘Boris Bounce’ following last month’s election, with many suggesting this would also be reflected in the housing market,” Josef Wasinski, co-founder of Wayhome. “First-time buyers now need the support promised by the Conservative government during the election campaign.”
The Conservative government isn’t famous for keeping its promises to First Time Buyers, having failed to start a single one of the 200,000 homes it promised in 2015. Boris Johnson made a number of election pledges to tempt First Time Buyers; however, these now need to translate into workable schemes.
Miles Robinson, Head of Mortgages at Trussle said: “ Moving forward, it’s vital that the government considers how best to support First Time Buyers following the closure of the Help To Buy ISA. House price growth is increasing, which means the deposit that would-be homeowners need is rising too.”
The good news is that interest rates remain tantalisingly low, and there has been a spate of new competitive mortgages to the market. Even if First Time Buyers face new challenges in 2020, they are unlikely let go of the homeownership dream.
Founder and CEO of Stone Real Estate, Michael Stone, said: “There’s no denying a protracted Brexit process has left the wider property market battered and bruised and as we head into a new decade, it’s important we ease the political plasters from its bloody knee rather than tearing them off in one go. Even with these positive, early signs of a rejuvenated market.
“An unyielding appetite from the nation’s aspirational first-time buyers and a resolute new build sector have ensured that while the rate of price growth has been muted, there has been no meaningful declines. With the worst now hopefully behind us, these two areas of the market should continue to go from strength to strength over the coming year and help drive performance back to previous health.”
