residential quarterly

Residential Quarterly | Winter 2019/2020

Q1 2020

We are already seeing an increase in stock levels and are confident that this is both a good time to buy and sell and predict this ‘bounce’ to continue to send positive ripples through the market for the first half of 2020.

Vanessa Hale

Director, Research

+44 20 7318 4675
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The majority win by the Conservatives in the General Election means that there is now more certainty around Brexit than there has been for over three years, especially following the recent passing of the withdrawal bill in the House of Commons during the early weeks of January. Markets have responded positively to this, with the FTSE 100 jumping 4% in the five days after the General Election, and subsequently closing the year strongly up 12% from the beginning of 2019.

The ONS recorded that the UK economy contracted by 0.2% in Q2 2019. The ONS official statistics indicate that the UK economy grew by a revised 0.3% in Q3 2019, thus avoiding recession.

The HM Treasury consensus forecast has been slightly revised upwards by 0.1%, with a new central estimate of growth of 1.3% over the course of 2019, with forecasts ranging from 1.1% to 1.7%. For 2020 the expectation remains unchanged at 1.1%, with forecasts ranging from 0.5% to 2.0%.

The British Chamber of Commerce (BCC) have increased their forecast for 2020 from 0.8% to 1.0%. For 2021 their forecast growth of 1.2% has marginally upgraded to 1.3%. The BCC states that the upgrades are mainly driven by growing anticipation of an increase in government spending. With that being said, the BCC reiterates that a weaker outlook for investment, trade, consumer spending and productivity are still expected to affect growth prospects.

The ICAEW measures business confidence on a scale of -100 to +100 (+100 being extremely confident, 0 being neutral, -100 being extremely negative). Confidence has been negative throughout the whole of 2019 however, and despite a marginal bounce back in Q3 2019, it subsequently worsened in Q4 2019, with an index score of -20.6. Reasons for the significantly low score cited by the ICAEW include concerns around Brexit and the fractured politics that are linked to it, as well as global economic uncertainty regarding trade. That said, the methodology behind the ICAEW index means that it is likely that this view is at least in part driven by the uncertainty prior to the General Election, which has now passed.