H+H Managing Director, Calum Forsyth reads the runes for 2020, taking the temperature of the housing market
Whatever your view of the election result, the decisive outcome does deliver at least a degree of certainty. The worst of all results would have been another indecisive hung parliament with no clear sense of direction.
The markets clearly agreed on this initial analysis, with both the pound and share prices, particularly for house builders, rising fast in the 24 hours following the election results.
Fast rises were followed by equally quick falls, however, reflecting the fact that, while the government is no longer in question, the direction and nature of future EU negotiations leaves much underlying uncertainty.
Combined with a less rosy global economic outlook we do not think that 2020 will start with boundless optimism or deliver spectacular growth.
However, with greater certainty in England, I do believe that some much-needed confidence will start to return to the home-owning population. New housebuilding will continue to benefit from the support of the Help to Buy initiative, proving so far to be both Brexit-proof and election-proof.
Based on clarity over Help to Buy for 2020 at least, housebuilders are projecting steady growth over the next twelve months.
We were reassured to see an indication in the Conservative manifesto that some incentive is likely to take over from Help to Buy when it expires in 2023 and a promised extension of the provision of longer-term mortgages may provide additional stimulus for the first-time buyer.
The government will need to act in order to reach its ambitious housebuilding numbers, but so far there is little indication of what actions may be suggested so our prediction of a steady rise in housebuilding numbers is based purely on existing government policies.
Of more concern is the RMI market, which has been decimated during the recent prolonged period of uncertainty.
Any dramatic change in volume for aircrete sales in 2020 is probably dependent on that RMI market which is itself dictated by consumer confidence.
I firmly believe that there is pent-up demand from people just waiting to make the move to a different house or to invest in extensions and refurbishment projects. If government stability and positive trade negotiations support optimism in the home-owning population then 2020 could prove to be an extremely positive year.
I’m a Scotsman, and we are not renown for boundless optimism. I am anticipating a year of satisfactory sales, with a marginal increase in housebuilding numbers.