House prices are showing signs of recovery across the UK, with the highest house price growth in 2019 reported in December, at 1.7 per cent, pushing the average house price growth for the year as a whole to four per cent.
This puts the expected house price growth for 2020 up from the previously expected two to three per cent, and this expectation sends a clear signal to prospective home buyers to act quickly if they’re planning to take out a mortgage this year.
The latest Halifax House Price Index shows that mortgage approvals were slightly up towards the close of the year, so it’s certainly not a bad time for mortgage applicants solely in terms of getting the green light on their residential loan.
However, the current housing statistics also point to an ongoing lack of supply of suitable housing. Buyer demand showed a significant upward trend in December 2019 – up 17 per cent according to RICS, and in marked contrast to the negative trend in buyer enquiries observed in October and November 2019.
January is traditionally a much busier time for the housing market than December, and there are already indications that demand has risen yet again this month. Without a doubt, the outcome of the General Election has had a positive effect on what’s known as ‘buyer sentiment’. More people are at least willing to start making enquiries, although it’s important to remember that enquiries don’t all automatically translate into transactions, which have increased by a more modest nine per cent.
But what about the supply of houses to meet this returning buyer confidence? This is where the market is not catching up, with the overall positive narrative of a house market returning to good health. New instructions rose by nine per cent at the national level, and in London and the South East, they remained more or less flat. This means that, on average, housing supply is just about increasing at a rate that is able to satisfy the return in demand, and, in some regions, it isn’t increasing proportionally at all. Managing director of Halifax Russell Galley comments:
‘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.
‘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.’
What does this mean for you if you are a prospective buyer? Now is not the time to hesitate: a once-again buoyant housing market that demonstrates a lack of supply will mean that competition for the best homes in the most desirable areas (especially outside London) will be tougher. So, if you’ve seen a nice property and you are in a position to buy, don’t wait.
By ANNA COTTRELL
Source: Real Homes