As we head into 2017 many people are asking us what will happen to the residential sales market this year and is it a good time to think about moving.
Based on recent forecasts, the general view among agents is that property prices in the UK as a whole are likely to rise marginally in 2017, with a return to sustained price growth in 2018.
Average UK house prices are expected to high marginally in 2017, before increasing by 2% in 2018 and 5.5% in 2019 to a total of 13% by the end of 2021.
The number of residential property transactions increased by 1% in October compared with the previous month, according to the latest HMRC statistics.
In total, there were 97,640 residential transactions in October, but while this was up on September, the data also shows that it was 8% lower year-on-year and significantly below the 165,480 recorded in March 2016, highlighting the unpredictable nature of our housing market.
In 2016 were was the inevitable rush of people trying to secure buy-to-let properties before April’s stamp duty deadline as evidence that the market was “firing on all cylinders” but it also led to market distortion, as reflected by the spike in transactions in March and slump in April, while the Brexit vote added to the uncertainty.
While housing has rebounded more strongly than expected after the Brexit referendum, the level of transactions has dropped considerably and we move forward with a fear that growth in 2017 will be notably slower than the previous 12 months. But there are some signs that the housing market is starting to witness a bounce back in activity levels.
Whether the government’s target of building 1 million new homes over this parliament is a realistic one remains to be seen, but either way more needs to be done to increase the supply of much needed new homes across the country.
The failure to construct enough homes to date means that Britain’s housing shortage has now reached crisis point, with the number of prospective buyers and renters dramatically outweighing the volume of homes on the market, while restricting the level of housing stock sales and letting agents have to offer.
However, the property market is mostly still feeling the effects of events [including higher stamp duty at the top-end of the market] which happened last year.” Disproportionately high stamp duty levies introduced in the last two years have done considerably more damage to the market, its associated industries and the supply of new homes than anything else, including an impending Brexit.
The biggest talking point in 2017 is undoubtedly going to be stamp duty, followed closely by further uncertainty surrounding Brexit.
While the housing shortage persists, interest rates look set to remain at ultra-low levels for the foreseeable future, and so it is not surprising that the general consensus is that property prices will remain broadly stable across many parts of the UK in 2016, albeit with a few price rises – and dips – in certain areas.
A poll of housing analysts, conducted by Reuters, found that house prices are expected to increase by 2% next year and 2.7% in 2018, although this will inevitably vary by region.
The ongoing uncertainty around the UK’s exit from the EU will undoubtedly slow down housing market activity across the country in 2017, while creeping inflation and the pressure that it puts on goods and services as well as interest rates could also have a big impact, but ultimately the severe shortage of UK homes means prices remain stable.