Published: 05/02/2020Most agree that the housing market will be more buoyant in early 2020 than it has been for some time. The challenge for agents in the short term will be to contain asking prices in the face of pressure from psyched-up vendors.”
Dataloft MD, Sandra Jones, gave her forecast for 2020 to Property Solvers.
2020 begins with a newly elected Prime Minister who, (allegedly), dreams of being Churchill for the 21stcentury and heralds ‘the new economic era’. Whether his dreams will be fulfilled is beside the point – the significance for the rest of us will be the grand gestures he intends to make in order to unite the masses, rouse the public mood and kick-start economic growth. So, we can expect ambitious spending plans for new infrastructure, (and the resurrection of the Northern Powerhouse), support for town centre regeneration and scientific research funding, alongside policies designed to promote home ownership, particularly for first time buyers – or the ‘youth vote’ as they are sometimes known.
Most agree that the housing market will be more buoyant in early 2020 than it has been for some time. The challenge for agents in the short term will be to contain asking prices in the face of pressure from psyched-up vendors. There is a real risk of a mini boom and slump if the market is artificially boosted, when what the market really needs is a long-term price adjustment to address affordability, rather than short term price acceleration.
Infrastructure investment is a sure way to create economic growth. It will increase housing demand and prices in locations that benefit. This government intends to borrow to spend. The new-found willingness to borrow is enabled by the prospect of long term low interest rates. As long as interest rates remain lower than the rate of inflation, the cost of borrowing is effectively negative and that means the government can feel confident about borrowing to spend. We will be watching the northern cities closely - Leeds, Sheffield, Hull, Manchester, Liverpool and all other locations singled out for improved transport, broadband and town centre regeneration funds. This is a medium to long term perspective, for investors looking over more than a decade, rather than a year ahead.
Looking to the nearer future, there several big themes that have been developing for some time but are now reaching a level of maturity that means they will begin to influence the behaviour of mainstream buyers, sellers, renters and lenders.
The first is climate change and/or sustainability. There has been a seismic and permanent shift in awareness. Just as Blue Planet ll put an end to the mass use of plastic-bags, so Greta Thunberg has changed the world - and she will change the UK housing market. The enduring image of a vulnerable child with plaits, pleading with adults to protect the planet for future generations, is irresistible to anyone with the mildest parental instinct. The raised awareness will prompt a reassessment of priorities that will flow through to demand and price. Features likely to have an increasing impact on value include the EPC rating, sources of heat and power, anything ‘biophilic’ and the blurring of boundaries between indoor and outdoor spaces.
Another theme that has reached a tipping point is flexible/agile working and working from home. Headline-grabbing troubles at WeWork have served to demonstrate just how big the movement has become. WeWork might not have perfected the business model but there is no further proof needed of the scale of demand for co-worker spaces and that goes hand in hand with the ability to work remotely from home, or somewhere close to home. So, easy access to co-worker spaces, or home-working home facilities, will affect home design and pricing, as well as workplace design.
One of the many uncertainties that will arise out of the new-found certainty of Brexit is my third theme, and it is the way we access, use and protect personal data. GDPR is an EU regulation. It may well be that the UK continues to adhere to its rules but if we were to follow the US model of data regulation more closely, the ability to access and use personal data would be greatly liberalised. The most immediate and overt impact of GDPR on the residential market has been on the way agents and housebuilders use mailing lists for marketing purposes.
The less visible but more pervasive impact will be on the way the industry understands demand for property - the priorities and motivations of buyers and renters. It is already possible to use geo-location data harvested from mobile phones to profile local populations, potential buyers and renters. Open banking apps are entitled to sell data about spending habits (and they do, generally to hedge funds) which can shed light on what priority a local population gives to the gym, or dog walkers, or food delivery apps. If it improves understanding, it benefits the industry – we will design better homes in the right places if we understand what residents really want. The ethics around use of that data is evolving fast and regulation struggles to keep pace. This kind of analysis will become more mainstream in the next year or two and it will be valuable.
Making predictions at the start of a new year has become a tradition. It is tempting to pull numbers out of the air on the basis that they will only be remembered if they prove right, or to make predictions so safe that they can’t be wrong (‘there will be further casualties on the high street)’. But the subtle business of predictions turns on identifying themes that will fuel confidence and influence behaviour in the year ahead - and the realisation that unforeseen events (Australian fires, Iranian airline, Brexit negotiations) can interrupt the best-laid plans.
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