As we approach the end of 2019 it’s worth taking stock of what has been a year dominated by political and economic uncertainty. With the passing of two Brexit deadlines, the resignation of a prime minister and a general election to round off the year, it’s not surprising that the housing market has slowed.
House price growth has decelerated throughout the course of 2019, mainly driven by price falls in London and surrounding areas of the South. Prices have been falling in London for the last 19 consecutive months, but the slowdown that started in central London in 2015 has spread to outer boroughs. Prices are now falling more in outer London (-0.4% year-on-year), than in inner London (-0.9% year-on-year).
While the overall number of transactions in the housing market has fallen this year, first-time buyers have played a bigger role, particularly in London. Rising incomes, slower house price growth and the stamp duty relief available to many first-time buyers have boosted their purchasing power. As a result, first-time buyers purchased 44% of homes in London so far this year, the highest figure since our records began in 2007.
However, many first-time buyers and second-steppers are looking further afield to purchase their home. The well-trodden migration path of people leaving London and moving to the country is as strong as ever, but households are leaving cities at a younger age than ever before. The average age of a city leaver moving to the country has fallen to 38 years, the lowest figure on record and eleven years younger than in 2012. This reflects the growing demand for movers to purchase a bigger, future-proofed home, rather than trading up every couple of years and paying moving costs each time.
But unlike house prices, rental growth has increased this year, driven by fewer homes available to rent. Rents rose 2.2% year-on-year last month, compared with 1.1% in October 2018. But whilst affordability remains a problem for tenants, particularly in the South, stronger income growth has created a little more capacity for rent rises than we’ve seen during the last few years.
So whilst much of 2019 has been clouded by further uncertainty, many of the trends we’ve uncovered this year are part of longer-term structural changes. But with a general election only days away, perhaps we could be entering 2020 with a little more certainty.