NEWS: a 2.3 percent Boris Bounce for property developers?
The start of 2020 has kicked off with a noticeable Boris Bounce in the housing market, with the Times reporting that house prices have risen 2.3% rise since polling day in December.
Is this a blip, or a new direction of travel for the market?
This was predicted by industry experts immediately following the election. Head of Commercial at Knight Frank, Stephen Clifton said in December 2019:
“We expect this clearer direction for UK politics to empower corporates to dust off expansion plans, developers to commence new schemes, and investors at home, and abroad, to quickly buy into what now looks like a very attractively-priced real estate market.”
What are the numbers looking like?
Looking at data taken in October 2019, last year saw the rate of growth of house prices hit only 0.7% (-3% from 2018). This is off the back of what has happened politically in previous months.
But a decisive victory in December meant that experts were projecting at year end that 2020 would see an uptake.
Since the election, the predicted changes in the industry appear to have materialised:
- Rightmove (Jan 2020) reports a record rise in UK House prices – the fastest rise during this time of year since they started their index in 2002.
- The Times are reporting that house prices have seen approximately a 2.3% rise since polling day on December 12th.
- On average, this means that the average house price has seen a rise of over £6,500.
What do developers need to consider?
The question remains as to whether this bounce will turn into an uphill roll for house prices continuously throughout 2020.
Some areas of the market did not change significantly over the past few years – the prices on the super-prime sector have stayed strong despite political uncertainty.
The details of decisions in relations to Brexit negotiations won’t roll out until late 2020 and beyond. For developers, this means they need to have finance arrangements to support through uncertainty.
Essential materials are imported from the EU such as bricks from Belgium and kitchen and bathroom components and ceramic tiles from Spain. A trade deal which introduces high rates on these could run higher costs for UK Developers.
Are you a property developer feeling this jump in the market? Do you need property finance solutions?
Call us at Clifton Private Finance:
And if you've found this blog useful do pass it on...