MAKING PREDICTIONS FOR THE HOUSING MARKET IN 2017?
Making predictions for the housing market in 2017?
Given what has gone on in 2016 with Brexit and the Trump outcome this could well prove tricky, but here goes!
Reuters 2016 Housing Market Poll showed that on average industry representatives thought prices would rise 4.7% this year, 2% next year and 2.7% the year after. Also, Rightmove forecasts a 2% rise in 2017 which would be the 7th consecutive year of price rises.
The Office for National Statistics (ONS) reported house price inflation continues to ease with prices rising by 6.9% in the year to October, down from 7% in September, whilst the average UK house price remains at £217,000.
According to the Council of Mortgage Lenders (CML), the housing market slowed in October and the number of mortgages granted to home owners was 20% down on a year ago. There was also a fall in the buy to let market, presumably due to changes in the stamp duty and imminent tax relief changes. However, the market saw an increase in remortgages which hit their highest level since January 2009 with homeowners taking advantage of low interest rates.
Howard Archer, the Chief European & UK economist at HIS Market expects prices to slow further next year and to stay flat, commenting there may even be a marginal drop.
The Chancellor in his Autumn statement promised a 2.3 billion fund for housing infrastructure to be used for infrastructure for up to 100,000 new homes in areas of high demand. Plus 1.4 billion for 40,000 additional affordable homes as well as confirming ongoing support for the Help to Buy, Equity Loan schemes and Help to Buy ISA.
The Chancellor also said there would be a ban on letting agents’ fees to tenants which will be introduced as soon as possible. However the Treasury advised that government will consult on this in due course, so it’s anyone’s guess when it would actually go ahead. The aim is to improve competition in the private rental market giving renters more clarity and control over how much they pay. Some people think the ban will simply mean that landlords pass on any increase to tenants which could put off would be investors so leading to a shortage in the rental market therefore pushing up rents. Others think it’s merely a political crowd pleaser! and view the rental market as an easy target.
Some brokers and financial experts think that mortgage rates will rise in the coming months. The Bank of England currently has interest at a record low of 0.25% however with inflation edging upwards it’s possible interest rates will increase next year so it would be a good idea for people to fix their rates now before any rises occur. According to Moneyfacts.co.uk the best buys for a 2 year fix are the Norwich and Peterborough Building Society at 1.39% (maximum loan to value of 65%) and the Yorkshire Building Society with a 1.44% rate (maximum LTV of 85%). There are also 5 year rates starting at 1.99% with the Leeds Building Society, and if you have a 10% plus deposit you can fix for 5 Years @ 2.99% with the West Bromwich Building Society.
Personally, I think 2017 is going to be another tough year. It’s still early days as far as Brexit is concerned and how it will impact on the housing market and employment. It seems there is a lot of uncertainty and a lack of confidence, but life does not stand still and for all sorts of reasons people will continue to want to sell their houses, buy new houses, need to move for new jobs etc. We have to face the future bravely and not be afraid of it, be confident, brave and optimistic!