It’s a somewhat uneasy time to be a homeowner as the huge rise in prices we’ve seen in recent years creates both winners and losers. So while many property owners are sitting pretty after seeing huge increases in the value of their homes, some fear their offspring my never be able to afford to buy.
Market slowdown and possible falls
But what does 2017 hold for the market? Most experts are predicting a marked slowdown.
The general view is that the uncertainty caused by Brexit as well as stamp duty increases and measures to cool the buy-to-let market will have a negative impact.
London suffering price falls
The high-end estate agent Knight Frank believes prices nationwide will suffer from a London ripple effect. It feels the market will fall by 1% in the capital, and rise by only the same amount in the rest of the country.
Knight Frank says central London is already suffering considerably and that prices have fallen by 6% this year already.
Another high-end estate agent, Savills, forecasts no growth at all in UK house prices in 2017. However, it believes some parts of the south-east and east will benefit from buyers cashing in on London homes to take advantage of price differentials.
Transactions to fall 8%
Online property consultancy Hometrack says transaction numbers will fall by over 8% in 2017, and that the market will depend on regional areas as London has lost its shine.
Will prices rise or drop by 2%?
Chief economist at research group HIS Markit, Howard Archer, is forecasting that prices will drop by 2% over the next 12 months. He states that: “We believe the fundamentals for house buyers will progressively deteriorate during 2017, with consumers’ purchasing power weakening markedly and the labour market likely softening.”
Online property search company, Rightmove, somewhat bucks the trend by saying that prices will rise by 2%. However, it forecasts the inner London market will see falls of 5%.
Rightmove believes high demand will return and that a shortage of supply in “the lower and middle market” should mean property values are supported and rise outside of the capital.
Supply of homes a crucial issue
Housing supply continues to be a crucial factor, and will be so for many years to come it seems. The think-tank Civitas recently said that housing supply in England only meets 80% of demand.
Without a reasonable increase in supply therefore, it’s hard to see anything other than a softening of the market, or slight price falls at the worst.
Sadly for first-time buyers, without radical Government intervention the chances of a serious market change in their favour remain slim.