What's in Store for Chiswick Property in 2020
Andrew Nunn and Associates looking forward to the coming year with optimism
Our prediction for 2020 is that it will be an encouraging year for the local property market as more buyers actively return to the market having abstained for the last four years. We have seen, since September 2019, a shift in balance with more sales being achieved at strong prices as buyers look to secure their next home. Conversely there is now an acute shortage of quality property to purchase and no sign of this improving until the end of the first quarter 2020.
All markets dislike uncertainty and since May 2016 the UK has been shrouded in economic and political turmoil which has been highlighted with a distinct lack of domestic and foreign investment in London property as confidence waned. Buying and selling property has become an expensive trade in the capital and one that both buyers and sellers alike have approached very cautiously over the last few years.
What is apparent, given the low level of transactions between 2016 -2019, is that there is likely to be a significant amount of “pent up” demand waiting on the side lines and to a lesser extent some “pent up” supply also waiting to come to market.
A significant part of that uncertainty has now been removed with the Tories securing the largest majority election win of any party since the 1980’s. The ability to govern unhindered will undoubtedly lead to improved all round business confidence and will kick start investment in the London market. We fully expect a positive “bounce” in the property market over the course of 2020 and would encourage anyone thinking of selling to take advice early in the year to fully benefit from that “bounce”.
Furthermore a combination of political stability in the UK combined with a possible increase in stamp duty at the next budget for overseas buyers means we are likely to see an immediate uplift in non-domiciled buyers registering to buy and looking to transact in the first quarter of 2020.
With mortgage rates being at an historic all time low and lenders battling to try and secure market share it makes sense that buyers will now quickly endeavour to secure finance and make that move. If you are looking to trade upmarket then it is always better to do it at the start of the upcycle before price differentials become tricky to straddle.
Given the sentimental nature of all markets, property included, it is entirely possible we could see an early 2020 hike in asking prices to satisfy the uplift in demand. Whilst there are many reports of values being depressed and “down 10%-15% since 2015” we have seen some very strong offers come through at the end of 2019 and would envisage higher asking prices and sale prices being achieved for appropriate property.
During 2019 we hear our some of our more reliable competitors blaming agents who over-value for the lack of transactions in the market and then, conversely, we hear from homeowners that some agents are less interested in maximising price and more interested in quick turnover. Whilst every client has their own objective the truth probably lies somewhere in between as house price growth will always underperform unless agents are prepared to push the parameters of higher asking prices – the key here is understanding the local market and knowing when and what type of properties are in demand at any point in time and then advising appropriate clients to take advantage. Personally I feel there is a window of opportunity now to take advantage.
So in summary we envisage 3%-5% growth in sales prices during 2020 and we also anticipate 2%-3% growth in rental values as demand in that sector steadily increases but stock levels remain low.
The rental market is becoming more regulated and more weighted in favour of tenants and longer term tenancies. Theoretically rental values in London should be increasing with many landlords selling stock over the last few years as tax changes start to bite into yields and they search for better returns outside the capital. Combine the landlord sell off with very few investor buyers acquiring London rental property should mean the overall size of the rental market is heavily reduced giving “would be tenants” less choice. However Brexit has also meant corporate demand has dropped off which has led to rents remaining static at best. We see a stronger rental market in 2020 but with tenants becoming more and more demanding and wanting to stay in situ longer the quality of the property will become all important.
As “build to rent” developments start to come into the market, offering high quality, high specification units on favourable long let terms and with attractive communal facilities, we see the need for the smaller private landlord to ensure their properties are 2020 (and beyond) ready in terms of both condition and functionality. On a fairly binary level never have low running costs and high speed broadband been so important in a rental property!
Finally if you are a landlord with investment property in your personal name then now could be a beneficial time to carry out some clever tax planning before capital values start to climb. For more information on this talk to Andrew who will be delighted to refer you to our reputable tax advisors.
Speak to us in early 2020 if you are interested in knowing more about the sales and rental markets and how we can help you achieve your objectives and in the meantime thank you for your continued support.
Andrew Nunn and Associates
Sales:
Andrew Nunn 020 8995 1500 or andrew@ andrewnunnassociates.co.uk
Lettings:
Katherine McDowall 020 8995 1600 or katherine@andrewnunnassociates.co.uk
January 4, 2020