As we begin 2017, many of us will be happy to see the end of 2016 with its staggering number of premature celebrity deaths and extreme political turmoil – on both sides of the Atlantic.
The property market has also been somewhat turbulent with a disappointing return for the Treasury following the reduction of the stamp duty threshold to £40K on buy-to -let and second homes back in April, as well as the introduction of a 3 per cent surcharge.
It was clear by November that since the changes the sharp decline in property sales had only amassed half the anticipated income expected by the Treasury, costing the UK economy nearly £1 billion.
This was exacerbated further by the months of speculation and the outcome of the EU referendum, which caused share prices and profits to fall for many estate agents and homebuilders.
As reported in our December issue, the UK HPI shows that house price growth for London, for instance, is the lowest for more than 3 years and has continued to fall over the last 5 years. In addition, the number of 25 year olds owning their own home has halved in just 20 years.
So the big question is… What will 2017 look like?
Marc Langdon, partner at property consultancy Bidwells, commented. “While housing has rebounded more strongly than expected after the Brexit referendum, the level of transactions has dropped considerably and we move forward with a fear that growth in 2017 will be notably slower than the previous 12 months.”
London estate agents are pessimistic, with many expecting continued low levels of activity resulting in zero growth in the prime spots particularly over the coming year although it is hoped that the current Chancellor Philip Hammond will undo the changes introduced by his predecessor.
Elsewhere in the UK others are more optimistic that as the market adjusts to what will become ‘the norm’, buyers will still want to take advantage of low interest rates.
The Royal Institution of Chartered Surveyors (RICS) predicts that house prices nationally will rise by 3 per cent over 2017 with the West Midlands, North West and East Anglia showing higher than national average gains. “The supply pipeline or lack of it is at the forefront of the analysis and dominates the residential market,” RICS said.
Whilst nothing is set in stone, and things can and do change, 2017 is expected to be even more challenging on the property market than 2016.
In spite of the current political uncertainties within the EU, across the Irish Sea the outlook is somewhat different following the Irish government’s introduction of the Help-To-Buy scheme and relaxed mortgage lending rules. Find out more here.