The Royal Institution of Chartered Surveyors (RICS) Housing Forecast 2020 highlights the need for Government to prioritise housing policy, in order to inject activity into the market and create a favourable environment for developers to help address the housing crisis. The 2020 forecast predicts that there will be little change in sales volumes for the year ahead, despite the new certainty around Brexit.
In 2019, the RICS survey data consistently showed that the market was plagued by a shortage of stock, with average stock levels on estate agents’ books hitting a new all-time low in June. This coupled with a continued decline in new properties being listed for sale – as respondents cited sellers caution over selling during the Brexit period – and stretched affordability in parts of the country – means the likelihood of a material pick-up in activity during 2020 seems unlikely.
This lack of impetus in sales activity, suggests house price growth will rise modestly throughout the year with the forecast predicting a 2% rise.
Tarrant Parsons, RICS Economist, said: “Momentum across the UK housing market has remained relatively subdued, with new buyer demand showing little impetus going into the New Year. That said, with the Conservative party winning a clear majority, the Withdrawal Agreement will very likely be ratified in the coming weeks. This could see some confidence returning, at least for a brief spell, meaning activity may see some uplift.”
“Challenges around affordability and low stock levels will continue to drag on the market, and Brexit uncertainty could resurface as the next deadline draws closer. As such, we expect house prices to rise by just 2% next year, with the outlook for overall sales volumes broadly flat.”
Rents are also expected to rise in 2020, and at a faster pace. As the sector continues to struggle with a lack of supply, the RICS survey data suggests rents will rise by 2.5%. In fact, the number of new landlord instructions has been stuck in negative territory for fourteen successive quarters, which is the longest run since 1999. In London, rents are expected to rise at an even faster pace of 3%.
Hew Edgar, RICS UK Head of Engagement and Cities Strategy, said: “In the past, many Government administrations have implemented a piecemeal approach to housing and tinkered around the edge of the main issues. This needs to stop in order to make real and substantive enhancements to the UK’s housing sector – whether that is the pace and quantity of housing delivery, quality standards, or energy efficiency. Mr Johnson’s parliamentary majority provides an ideal opportunity to do this; but he, and his team, must grasp the nettle.
“It is imperative that the new administration hits the ground running and makes headway into the plethora of housing pledges within the Conservative manifesto – ensuring they actually deliver holistic policy, as well as moving the housing sector forward with a consistent and long-term approach.”