It’s crystal ball gazing time as property firms and economists predict what might happen to the housing market in 2017.
According to Rightmove, UK house prices will rise by an average of two per cent next year. “Although the market has built up some momentum, which we expect to continue into next year, the uncertainty plus increasingly stretched affordability will continue to weigh on house prices, so our forecast for 2017 is for modest price growth. We forecast Inner London to remain weak and prices to fall by a further five per cent in 2017, as its price bubble continues to deflate,” says Rightmove’s Miles Shipside.
He adds that Brexit uncertainty hangs over the market though,for now, any nervousness is being over-ridden by high demand and a short supply of suitable homes for sale in the lower and middle market. Supply remains tight in new-to-the-market listings and available stock for sale, according to Rightmove data. Fresh supply is only two per cent above last year, failing to keep pace with and replace the 5.2 per cent increase in sales agreed.
Miles Shipside says that there will be a continued demand from first-time buyers as in some cases monthly mortgage repayments are cheaper than rent. The upper end of the market, he adds, will still hang back as the cost of trading up is often a big jump for less perceived gain.
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Over at JLL, analysts say price growth will be subdued until 2019, with a slowdown in the number of new homes built due to uncertainty over Brexit negotiations. The firm predicts that Yorkshire prices will rise 0.5 per cent next year before creeping slowly up to five per cent in 2021. However, transactions look set to fall by 17 per cent thanks to uncertainty surrounding the process of leaving the EU and the effect of higher levels of stamp duty for investors and those buying at the top end of the market. JLL is also concerned about slowing rates of construction.”
Lucian Cook, Head of Residential Property Research at Savills, has compiled a detailed report with a five-year house price forecast. He expects UK values to remain static throughout 2017 followed by a two per cent rise in 2018, a 5.5 per cent rise in 2019, a three per cent increase in 2020 followed by two per cent in 2021, which adds up to 13 per cent over the five-year period.
Private rents are predicted to rise by 19 per cent by 2021, while household income is forecast to increase by 13 per cent and employment rates by 1.8 per cent. Savills believe that interest rates will be 0.1 per cent in 2017 and 2018, rising to 0.4 per cent in 2019 and 0.9 per cent in 2020 before reaching 1.4 per cent in 2021.
Based on the average value of a UK home being around £214,000, Savills’ forecasts would mean a typical property will be worth around £27,900 more by the end of 2021, taking it to £241,900.
The average house price in Yorkshire is now £147,000 and is forecast to rise by ten per cent over the next five years to reach £161,300.
Looking across Britain, East Anglia is likely to see the strongest house price growth over the next five years, with a 19 per cent uplift, followed by the south east of England, where prices will be 17 per cent higher. London is expected to see 11 per cent growth in property values by the end of 2021.
Scotland and the north east of England will see the weakest house price growth over the next five years, both seeing increases of nine per cent.
Savills is predicting expansion of the “underdeveloped” build-to-rent sector while landlords will be constrained by higher stamp duty costs and less tax relief, leading to a supply and demand problem that will push up rents for private lets
Lucian Cook suggests that the best buy-to-let opportunities lie in university towns where student lets offer good yields. For developers, Savills highlight urban mixed use development sites in Leeds, Birmingham and Manchester on the back of potential HS2 and the general resurgence of UK core cities.
*Property Post will feature Yorkshire property market predictions from 12 experts from around the region on December 31.