Despite the disastrous market performance of the retail sector, the residential market has performed remarkably well, even in the face of considerable political uncertainty.
While Brexit has affected the sale of houses in the UK this year, the housing market has continued to perform within expectations, delivering between 2 – 4% growth.
Commenting on this year’s housing market, Russel Galley, Managing Director at Halifax, said: “The housing market in 2019 followed a similar path to recent years. Modest price growth was supported by falling mortgage rates and a low volume of houses for sale, factors which can in part
be attributed to elevated uncertainty. This helped to underpin a degree of resilience in the market.”
The overall outlook for 2020 is considerably brighter than 2019; however, house price inflation is expected to remain relatively weak – at levels between 1% and 3%.
One of the significant issues facing the UK at present, however, is the relatively low-level of houses available. Halifax predicts that low levels of homes, as well as challenges facing first-time buyers, will continue to inflate prices and restrict demand.
Russel adds: “Prospects for 2020 look a bit brighter, with uncertainty in the economy falling back somewhat, transactions volumes anticipated to pick up and further price increases made possible by growth in households’ real incomes. However, the shortage of homes for sale and low levels of housebuilding will continue to support high prices, while the challenges faced by prospective buyers in raising the necessary deposits may continue to constrain demand.
“As a result, our forecast for house price growth in 2020 is in the range of 1% to 3%, consistent with the pattern of weaker growth seen since 2017.
“Longer-term, a renewed focus on housing policy and increased infrastructure investment aimed outside the South East, for example, could help rebalance regional house prices. However, it’s important to note that any policy changes would be unlikely to impact the market in 2020.
“Although prices will be supported in the near-term by [an] insufficient [of] new buildings and low-interest rates, a sustained period of price growth below income growth as a result of policy action would help to address first-time buyer difficulties.”