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- January 9, 2017
- by astonknowles
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In 2016, national house price growth was up 6.9% according to the Office for National Statistics, making the RICS economist, Mr Rubinsohns 6% growth prediction to be the most accurate of the experts. With the average house price in the UK at £217,000 (£474,000 in central London). Despite the unexpected referendum result which caused the market to halt suddenly in June, this was relatively short lived across the country and was soon overridden by high demand. It is anticipated however, that we may see a more profound effect on the economy and property after article 50 is invoked.
Some experts claim this boom can’t continue and as prices have continued to rise year on year, many people have been guessing as to when growth is likely to come to a halt. For would-be buyers, getting on the housing ladder is made harder by a failure to build enough homes to meet demand and the lack of supply of suitable homes for sale in the lower and middle market in many parts of the country.
The slowdown in central London and other more affluent parts of the country is the result of the most significant change in the housing market in 2016 – a stamp duty surcharge on buy-to-let and second homes. Since April, anyone buying a home that is not their main residence has had to pay a 3% stamp duty surcharge. This meant that, for second homes or buy-to-let properties, the rate for properties priced at more than £1.5m reaches 15%.
The new surcharge, alongside a rise in normal stamp duty costs for £1m-plus homes since 2014, had a bigger impact on the market than the Brexit vote in June, according to experts.
|UK house price forecasts for 2017|
|Henry Pryor, property commentator||4% fall|
|Ed Stansfield, Capital Economics||2% rise|
|Ray Boulger, John Charcol mortgage brokers||1% rise|
|Simon Rubinsohn, Rics||3% rise|
|Robert Gardner, Nationwide building society||2% rise|
|Martin Ellis, Halifax||1% to 4% rise|
In the West Midlands market, I predict a 3% rise slightly above the national average of 2% as the West Midlands out performs the national market.
Market sentiment will be mixed, first time buyers and those in rented accommodation who have a need to buy will continue to push demand, often paying in excess of the asking price to secure an opportunity. Prospective purchasers on the other hand who are second or third time buyers who don’t have to move may instead choose to extend as they worry they either won’t find what they are looking for or will have to pay ‘over market value’ in exchange for the opportunity.
More new homes are required nationwide, last year development was up 4%. In the year 2015-16 just under 190,000 homes were added to England’s stock, the highest amount since the housing market crash. However, market sentiment may deter developers which could mean fewer homes are started in 2017.
The West Midlands has a strong export market and manufacturing sector, this coupled with the re-development in Central Birmingham is attracting large corporate entities like HSBC, HMRC and HS2 who have re-located to the City. HSBC will have over 1000 key staff also re-locating to the area who will be house hunting in either the private rental or residential sales sector. Last year 6,016 people moved from London to Birmingham, more than to any other UK city. The problem will be the lack of supply that will continue throughout most of the year, a possible slow in house building and also the prospect of interest rates rising which may make mortgage lending criteria even more difficult, potentially a problem for first time buyers.
More changes face landlords in 2017 in the form of tougher affordability checks for buy-to-let mortgages and the start of the withdrawal of tax relief on mortgage interest. The CML said it expected buy to let activity to slow as a result and this will be the trend nationwide.
Across the UK most commentators predict rent rises of 2-3%.