It’s that time of year again, when predictions on the property market over the next 12 months are coming in thick and fast. What’s going to happen to house prices in 2017? Will the impact of Brexit start to kick in once Article 50 is triggered? And what impact will Philip Hammond’s housing funds, announced in November’s Autumn Statement, have on supply and opportunities for first-time buyers and the wider market? With so much political upheaval, predictions are understandably cautious for the year ahead. I don’t know about you but, we’re seeing some interesting trends which are likely to shape the year ahead and are thoughtfully optimistic in our outlook for 2017.
Rightly or wrongly, house prices remain the de facto measure of property market success. Analysts and the big house price index providers seem to have mixed views on what the future holds. Property group JLL has said prices will increase by 0.5% in 2017, whereas Savills believe we will see flat growth next year as Brexit puts the brakes on four years of house price increases.
More recently, Rightmove has predicted a 2% uplift in asking prices, fuelled by high demand from buyers which may provide the buoy the housing market needs to maintain growth, albeit at a steadier pace than in recent years. In our own local market, we have seen barley any drop off in house prices yet and fully expect the usual hike in demand from prospective buyers and tenants in January. Lenders’ willingness to provide mortgages at affordable rates both in the residential and buy-to-let markets will, of course, determine how readily these prospective home movers can act, but demand is certainly there so on this basis, as already mentioned, we are cautiously optimistic about house prices in 2017.
The wider environment and uncertainty about Brexit will be one of the main stumbling blocks for the housing market in the year ahead. Lenders are already showing signs of nerves, with the number of mortgage transactions in October down by 20% annually, according to the Council of Mortgage Lenders. We know the Referendum itself did not cause the catastrophic housing market crash that was predicted, but it is difficult to foresee the impact that triggering Article 50 will have. Some pundits have predicted a second wave of uncertainty as the UK renegotiates trade deals with Europe, while others believe the impact on the housing market will actually be less than the Brexit vote itself as we know it is going to happen and are therefore in a position to be better prepared.
On a more positive note, we can look forward to hearing more about the plans for Philip Hammond’s two property funds, including a £2.3 billion housing infrastructure fund to deliver infrastructure for up to 100,000 new homes in areas of high demand and a £1.4 billion fund to deliver 40,000 additional affordable homes. As many home buyers over the last few years will tell you, the supply of properties to the market cannot keep up with demand from buyers and investors. Greater supply will create more choice, as well as having the knock on effect of speeding up transactions and property chains as buyers are able to find suitable properties more quickly and easily.
In our local markets of Horsley, Guildford and Cobham, buyer demand remains strong and we have seen no drop off in prices, albeit with the usual slowdown in activity which every sector experiences around the festive season. Landlords will, of course, face a number of obstacles in 2017 such as higher taxes and potentially increased fees, but with the right management should be able to respond to growing demand from tenants.
It remains to be seen how lenders will respond to Brexit uncertainty in the months ahead. We can only hope for a clean and transparent exit from the EU, so fear and economic instability is minimised and the housing market can continue to grow even if it’s at a slower rate than in recent years. So despite mixed reports on house prices 2017, we believe demand for property will remain high and this will help ease some of the bumps in the road ahead.