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23 Dec 2019

What will happen to house prices in 2020?

Discover the key factors that will influence the property market next year

A new year is about to begin, and with it will come hope from buyers and sellers alike that the property market has entered calmer waters.

Unfortunately we don't have a crystal ball, but its safe to say that house prices will remain a big talking point in 2020, whether you're a first-time buyer looking to get on to the ladder, or a buy-to-let investor wondering whether to stick or twist.

Here, we take a look at where the market currently stands and explain the key factors that will affect whether house prices go up or down in 2020.

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What happened to house prices in 2019?

House price growth flattened out across the UK in 2019 amid wider economic uncertainty.

The most recent data from the Land Registry shows that the average UK house price rose to £250,677 in September, up £2,500 in the space of a year.

You can hover your mouse over the interactive map below to see how house prices have changed around the UK in the past 12 months.

The biggest year-on-year growth came in Northern Ireland, where house values increased by 4%. A subdued market in England, meanwhile, led to rise of just 1%.

Are people still buying houses?

During times of uncertainty both buyers and sellers can get the jitters, resulting in a slowdown in the number of houses listed and sold.

Ahead of December's general election, the property portal Rightmove reported that there had been a fall of 15% in the number of homes being listed for sale.

But property listings alone don't tell the whole story.

Provisional transaction data from HM Revenue and Customs shows that 103,680 homes were sold in October 2019 - that's up 4.3% on the figure recorded a year earlier.

Whichever way you slice the figures, it's plain to see that while the market has been subdued, people are still buying and selling.

What will affect house prices in 2020?

The result of the general election could provide a shot in the arm to the housing market, but when we look a little deeper the picture isn't quite so clear-cut.

These four factors could have a major effect on what happens to house prices in 2020:

  • Brexit:despite the election result, it's not yet set in stone that the UK will leave the European Union at the end of January, so we're unlikely to see much movement in the market before then. And even if Brexit does go ahead as planned, there's still the possibility of some economic volatility as trade talks progress.
  • The Budget:the market is likely to remain in a holding pattern until February's Budget, in which the government could introduce a stamp duty surcharge for overseas buyers. With reforms for first-time buyers and landlords also likely, we might not see the market kick into life until the spring.
  • Supply and demand:should Brexit go ahead, we may see more houses come on to the market and transaction numbers increase. Rather than making prices rise, this extra supply could be a good thing for buyers looking for a bargain. Even if buyer confidence returns, it's likely to remain a very price-sensitive market, with overpriced homes left languishing in the listings.
  • The base rate and mortgage market:the Bank of England base rate could shift either way in 2020, depending on what happens to the wider economy. Right now, it's a good time to get a mortgage as a first-time buyer, home-mover or landlord. But attractive rates and stiff competition will need to continue into the new year if the market is to kick back into gear.

House price predictions for 2020

Nobody knows exactly what will happen to house prices in 2020, especially in a market where values shift and sway on a street-by-street basis.

If the past couple of years are anything to go by, it's unlikely that we'll see a slump or a boom, despite what the headlines might tell you.

Estate agents

The global agency Knight Frank says that an increase in supply could see prices fall at a time when vendors expect them to rise, potentially resulting in a stand-off between buyers and sellers.

Savills, meanwhile, predicts modest price growth in 2020, with a bounce earlier in the year that peters out during the summer and autumn.

In its longer-term forecast, however, the agency says house prices could increase by 15% in the next five years, with a 'Brexit bounce' only gaining a foothold after the transition period ends.

Property portals

Rightmove predicts that asking prices for homes coming on to the market will rise by 2% in 2020, with increases of 2 to 4% in northern regions and 1% in southern England.

The portal says that first-time buyers are the main drivers of the market, but that more work needs to be done to help people aspiring to get on to the property ladder.

Tips for buyers in 2020

In a market with such small margins, it's imperative to negotiate to ensure you get a good deal in 2020.

Before fully committing to a property, look at sale and listing prices in the area, and consider having a house survey conducted to ensure you're in possession of all the facts.

It can also help to get a mortgage agreement in principle to make yourself stand out from other bidders if you're buying in a competitive area.

As part of your research, check out our guide on finding the best places to live, which offers tips on spotting an up-and-coming area before it's over the hill.

Tips for sellers in 2020

If you're thinking of selling your home in 2020, research will be crucial.

First of all, ensure you're fully aware of the true value of your property - that's what somebody will pay for it, rather than what an estate agent will list it for.

Consider whether any home improvements could add value to your home ahead of a sale, and get quotes and valuations from several local estate agents.

If you're selling an older home, consider having a house survey done to offer extra peace of mind to potential buyers.

Whatever you do, don't rush into putting your property on the market.

Instead, take your time to consider what buyers are really looking for, and what you can do to make your property stand out from the rest.

Advice on buying a house:

Advice on selling your house: