Following the events of 2016, it’s easy to see why experts across the country are torn when it comes to the question “what will 2017 bring to the property market?” Uncertainty caused by the Brexit referendum has rolled over into 2017, with many sources predicting that with no surge at the beginning of the year to beat the changes to stamp duty as we had in 2016, prices will likely stabilise or fall across the UK as an average, but pick back up in 2018.
At Living in London, we see things taking a different turn. Whilst we can understand why the media is pessimistic about the upcoming year, we expect to see a slowdown in the market as opposed to a drop off in price and activity. Top institutes across the country agree that 2017 will be a year of re-balance, with The Royal Institute of Chartered Surveyors (RICS) predicting a Nationwide rise of 3 per cent in house prices. Property portal, Rightmove is predicting an average rise of 2 per cent, while Halifax predicts a rise of anywhere between 1 and 4 per cent.
We believe 2017 will bring a much more price sensitive market in which properties will need to be priced accurately in order to sell. It is critical now more than ever that you choose a local agent known for giving area specific, honest advice over whoever gives the highest appraisal. Overpricing a property in 2017 could have a detrimental effect on whether the property sells at all, striking up several red flags with buyers due to a lack of interest and time spent on the market, even with a price reduction. You may then be required to price the stale property lower than its value in order to regenerate market interest – a huge waste of time, and unfortunately, money.
2016 saw a total rise of 6 per cent across the UK despite challenges. With housing and affordability already stretched, a slowdown in the market may be just the thing we need for more sustainable growth and realistic prices. Housing demand is still drastically outweighing supply, especially in London’s first-time buyer and second-stepper markets, which helps to keep prices competitive. Reduced interest rates mean mortgages are at record lows, keeping the market moving for first-time buyers. Gathering a deposit is still the greatest barrier for first-time buyers, so actions such as the Government funded Help-to-Buy scheme must continue to help millennials move out of their parents’ homes and onto the property ladder.
Higher end properties were hit hardest last year with the market facing the effects of the changes to stamp duty, along with Brexit uncertainty. However, we have seen considerable interest from overseas buyers, attracted by the weaker pound.
The changes to stamp duty in April caused a great decline in the number of buy-to-let transactions agreed in 2016, while bringing in only half as much as the Treasury had expected by November according to The Telegraph. To put this in perspective, data collected by Rightmove shows buy-to-let transactions actually declined by 30 per cent overall and a whopping 50 per cent in London. Many figures working in property hoped for the changes to be revoked in the Autumn Statement to restore some faith in the property industry and keep the market rolling. Instead, landlords and investors are set to face further challenges in 2017 through tougher affordability checks for buy-to-let mortgages and the start of the withdrawal of tax relief on mortgage interest.
As a result of this, The Council of Mortgage Lenders (CML) expects activity to slow but not grind to a halt. Simon Rubinsohn, RICS Chief Economist said it was unlikely that investors would completely lose their appetite for buy-to-let. “You do have to bear in mind the alternatives,” he said. “Also the mentality of property investment is quite embedded despite these changes.” [Quotes from The Guardian] Rightmove is also predicting a 4 per cent increase in rents due to less availability of stock, so we advise investors and landlords not to panic or be deterred by the upcoming changes, just use due diligence with financial forecasts and planning.
It’s important to acknowledge that while it’s great that the experts are predicting a rise of between 1 and 4 percent, this is the UK average. Prices and activity in Scotland is going to be nothing like the London market, and likewise the differences between the sale of a small one bedroom flat and a million-pound house will be extreme. If you’re looking to invest in 2017, look for an area that can offer steady price and rent increases. We’d also recommend looking into areas that are planning change or redevelopment and choose an agent that knows the developments like the back of their hand. We predict that Canada Water will be a very strong investment location in 2017 due to the Canada Water Masterplan in which Southwark plans to build a brand new town centre, 3,500 homes and over 2,000 student flats.
Essentially the laws of the housing market will always apply to any market, in any year, throughout any conditions. Research the price of your property before inviting any agents around to value your home. This is easily done by using SOLD prices of properties in your street, block, development or postcode. Research the agent you intend to use, make sure they operate in the area, have a local office, a proven track record and are reviewed well. Finding a buyer is one thing but knowing the certain nuances, legal work, and how to progress your sale efficiently, effectively and to a time frame often eludes agents who rarely deal with such issues.
Make sure you like and can have a good working relationship with the company you chose. When you call for them can you speak to the correct person? Do they return your calls/emails in a timely fashion? Can they support their claims? And finally, do you feel confident that they will give you the service you deserve? If you answered no to any of these questions, it might be time for a change.