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The property sector and the wider economy are inextricably linked. Given the political turmoil and uncertainty around Brexit at the end of 2019, it is easy to see the next decade starting with past issues still shackled to it.
Consumer and property stakeholder sentiment certainly suggests that the property sector in 2020 will face initial difficulties, remain subdued but will demonstrate improvements and resilience once the outside influences are resolved.
What the surveys say?
The long term outlook from respondents of the RICS Residential Survey for October posted the highest net balance outlook in over nine months with +23% of respondents optimistic about the year ahead.
Whilst the near term outlook improved in the latest release, respondents are still relatively pessimistic about the progress the sector will make in the next three months. 16% more respondents feel buyer enquiries will fall with 19% more respondents anticipating the number of sales to decrease in the early stages of 2020.
In terms of supply entering the market, 49% more respondents felt that this will be an overwhelming issue moving into the next decade.
Over the past decade, the number of properties available to buy has fallen by 59% according to NAEA Propertymark.
Where there were 65 available properties per estate agent branch in 2009, this figure has contracted to 44 in 2019. Worse still, the average number of available properties between 2018 and 2019 was only 38.5 with adopting a wait and see approach amidst the cloud of Brexit and political uncertainty.
Experts have long estimated that property sector growth coincides historically with a minimum Gross Domestic Product (GDP) economic increase of 2% per year.
Following the initial delay to Brexit in March, HM Treasury commissioned a comparison of independent forecasts for the UK economy, all of which speculated an average UK GDP growth of 1.3% by the end of 2019 and 1.4% in 2020, restricting the growth in the property sector next year.
Another forecast into the UK property sector, completed by JLL, estimates that GDP growth will hit 2% in 2021 but will consistently fall below 2% and average 1.75% over the next 5 years up to 2024.
In turn the predictions anticipate UK house price growth and housing transactions will rise steadily after 2021 once greater economic and political certainty return.
Whilst house prices will remain subdued at 1% growth in 2020, they are expected to increase by 4% in 2022 and average over 3% between 2020 and 2024.
Between 2020 and 2021 UK housing transactions are expected in increase by 40,000 from 1.22 million to 1.24 million.
Furthermore, UK transactions are estimated to grow by 11.5% from 1.22 million in 2020 to 1.36 million in 2024.
GlobalX offer an extensive range of property searches for both residential and commercial transactions throughout Wales and England. We work with solicitors to streamline their processes helping to speed up the conveyancing process.