House prices in 2020: what should first-time buyers expect the year Brexit finally happens?
The good news is that the outlook for taking out a mortgage in 2020 remains largely positive. Borrowing costs remain at a record low, and a relatively stable labour market with low unemployment is mitigating the uncertainty surrounding Britain's economic future outside the single European market.
A stable but low rate of house price increases in the last quarter of 2019 is also boding well both for those looking to sell and buy a home. The once-feared sharp fall in house prices is now highly unlikely, but house price growth remains at below the rate of average wage growth – very good news for potential home owners.
According to the latest Nationwide House Price Index, house prices rose by 0.1 per cent in December, and annual house price growth stood at 1.4 per cent – the first time it's risen over 1 per cent since December 2018.
Nationwide's overall prediction is modestly optimistic – a year of the economy (and the property market) 'expand[ing] at a modest pace', with the rate of house sales and mortgage approvals remaining stable. Robert Gardner, Nationwide's Chief Economist, commented:
'Looking ahead, economic developments will remain the key driver of housing market trends and house prices. Much will continue to depend on how quickly uncertainty about the UK’s future trading relationships lifts as well as the outlook for global growth.'
This is not to say, however, that first-time buyers aren't facing the usual problem of unaffordable housing: despite low interest rates, mortgages still remain out of reach for the many due to the difficulty of putting together a decent deposit. The slowing down of the property market since the Brexit vote hasn't made house prices affordable: it has merely stalled the unsustainable rate of growth we were seeing before 2016. Gardner continues,
'Even in the North and Scotland, where property appears most affordable, it would still take someone earning the average wage and saving 15 per cent of their take-home pay each month more than five years to save a 20 per cent deposit. In Wales and Northern Ireland, it would take prospective buyers nearly seven years, and almost eight years for people living in the West Midlands.'
Almost half of first-time buyers in 2017-2018 drew on parental support in order to get on the property ladder, up from just a quarter in the mid-1990s. The solutions to this growing reliance on financial propping from family can only come from new government initiatives to expand the affordable housing sector beyond existing schemes such as Help to Buy.
Find out more about buying a house in our guide.