As the year draws to a close, it is time to look back and reflect, and look forward to the new year coming, with respect to the housing market. Has it been a good 2019? Will it be a good 2020? Let’s delve into the main points of the property market over the last year.

The overriding feature of 2019 – particularly when compared to previous years – is the sheer unpredictability of the housing market, and the way in which it is difficult to make any long-term assumptions. This hasn’t been helped by the further unpredictability of Brexit which has kept homeowners guessing about its potential full impact on the market. This has meant that many homeowners would prefer to sit on their hands rather that take the plunge and sell – or buy, for that matter.

This near-static state of the market has also impacted house prices, which have almost flatlined over the last year. However, there is good news, when comparing current house prices against the high of 2007. Across most of the country, there is notable positive growth, with properties in the capital finishing the year at around 55% higher than in 2007, and most regions experiencing growth of between 10% and 20%.  The only real loser is Northern Ireland in which property is reckoned to have lost about 40% of its market value compared to 2007.  At the same time, wages have grown by about 27%. But, while increases in house prices are outstripping increases in wages, the overall levels of employment are high, and mortgage rates are attractively pitched, with high loan to value (LtV) offers being made.

The year saw the largest number of new builds compared to the previous 12 years, with builders and developers recording more than 43,000 new homes in the UK, with inward investment in the rental sector driving much of the growth. In addition, house building opportunities are going beyond normal supply and demand but investors are also embracing government efforts to regenerate previously run-down areas to breathe new life into existing communities.

Changes to tax breaks have certainly hit the Buy to Let (BtL) market, and with the government phasing out mortgage interest tax relief, it is seen as much less of an opportunity.  From April 2020, the loss of tax relief on borrowings and the ending of capital gains lettings relief in almost all cases will be the last straw in maintaining profitability, and may just be the death knell for massed BtL. Tax changes have also driven management changes and it is becoming increasingly the case that BtL is being driven through the limited company model, to maximise tax breaks.

So, what of the future?  We still have the shadow of Brexit and a general election looming, but all of the major parties are placing property as a major part of their manifestos. There are moves towards more social housing, but parties are also recognising the need for affordable housing for first-time buyers and those on a low income. Of course, we have heard this before and whether it all actually materialises is another question, but 2020 looks good from a property point of view, on paper at least.

If you are looking for a new mortgage, or are just interested in the market, come and chat to us at Grange Mortgages, and let us help you.