The UK property market looks set for a turbulent year
Agents claim a post-election bounce, but underlying problems remain
Browsing property websites is a Christmas Day tradition with me — along with ordering everyone out of the kitchen and smashing the meat thermometer. Last year, I was one of the 1.5m people who excused themselves from festivities and logged on to Rightmove. Like the shepherds at the nativity, we were just the first on the scene. Between Christmas Day and January 2, Rightmove traffic was up 231 per cent.
For many, I suspect the festive urge to scroll through pictures of other people’s houses is brought on by a confrontation with the inescapable truth. We look around the lunch table — teenager squeezed up against the wall, granny sinking in a deck chair — and think, we’re going to need a bigger place.
The Yuletide traffic surge is a UK property market indicator. “If the phones don’t start ringing in the weeks after Christmas, then something is wrong,” says Roarie Scarisbrick, a buying agent at Property Vision.
This year the pressure is really on. Since the Conservatives returned a majority in this month’s general election, estate agents have forecasted great things in 2020: price rises and a bumper year in sales.
Are they right? I doubt it.
The overhanging uncertainties of 2019 are still overhanging. Brexit looks sure to go ahead on January 31, but the long-term trading arrangement with the EU is unclear. Given that the government has made an extension to the transition period less likely, the spectre of a no-deal Brexit — and the catastrophic effect this could have on the UK economy and housing market — has returned.
Aside from the overhanging uncertainties, there are the underlying facts. In parts of the country, the property market has slowed to a crawl. House prices are high, lending is constrained and wage growth has been weak — with real wages still lower than in 2008. Unless any one of those things changes, the logjam is unlikely to break free — and certainly not in London.
The data tells the story. In the first seven months of 2019, 53,500 homes were sold in the capital, according to the Land Registry — 27 per cent fewer than in the same period in 2014, when 73,450 homes sold.
That sounds like a lot, but the 2014 figure was no great shakes. Between 1997 and 2007, only one year failed to record 80,000 sales in the first seven months. In the first seven months of 2002, the Land Registry chalked up 100,880 sales.
In London, house prices are so high — and transaction costs so onerous — that many homeowners have no option but to stay put. In 1988 the average household moved once every 8.63 years, according to Zoopla. In 2017, it was once every 23 years.
Which means most of us logging on to Rightmove this Christmas will be looking, but not buying. And this includes me. My wife and I bought our first flat in north London 18 months ago, but the gap between flat and house prices has widened in recent years, and it is difficult to see when we will be able to trade up to a house.
I can only describe my urge to log on to property portals at Christmas as a kind of self-flagellation. Prices where I live have fallen. But even if we sold our flat, to buy a three-bedroom house down the street would require our salaries — both mine and my wife’s — to rise by more than 43 per cent.
That would be quite the Christmas bonus.