Whilst October saw a fall in the growth of house prices for the first time since July 2015, estate agents are advising house-buyers and sellers alike not to panic. It is thought that the slow-down is simply due to buyers holding off until the New Year.
Traditionally, October onward has always experienced a slow-down due to buyers not wanting to go through the stress of moving around the Christmas / Winter period, although estate agents admit that the number of transactions are lower than expected for the time of the year compared to previous years. There is a lot of optimistic around, however, with both estate agents and the Royal Institute of Chartered Surveyors reporting that the market has shown resilience, with activity rising again following the initial post-Brexit ‘wobbles’ of July and August.
House Price Indices report consistent increases, with yearly rates aligned with a long-term trend starting January 2015. Estate agents in the South advise that buyers and sellers continue to show confidence in the long term property market, with many keen to take advantage of the continuing low interest rates, although they know these cannot be maintained indefinitely.
However, many analysts are still forecasting a drop in the growth of house prices in 2017 of five per cent, whilst others are predicting that house prices across the UK could ‘flatline’.
Savills estate agents also predicts that the average house price will stagnate during 2017, however, they believe a modest increase in growth of 2 per cent will occur in 2018, followed by a further growth of around 5 per cent in 2019.
Although Savills’ forecasts are in line with other estate agents and housing indices ranges, Savills do not agree with the widely held belief that buyers will look to buy in more affordable regions, beyond the more expensive areas of London and the South East. Savills forecast that the Mildlands and London will stagnate in terms of price growth whilst the North East and Scotland will see an actual decline in growth.
It is believed that only the South of England will experience an increase of around 2.5 per cent.
First-time buyers will continue to struggle as the number of available properties shrinks and prices remain high, making deposits difficult to afford. This will increase the demand for rental properties, with rents rising by as much as 19 per cent from the present day to 2021, whilst house prices are predicted to rise by only 13 per cent over the same period, according to the BBC.
Whilst most estate agents’ prophecies are more positive than those suggested by economists immediately following 23rd June, everyone agrees that any prediction is dependent on the outcome of the UK’s exit negotiations with the EU, and the subsequent stability of the UK’s economy.
Furthermore, the effect of the recent High Court ruling concerning the triggering of Article 50 is unknown. It is, however, likely to further complicate the outlook for the longer term UK property market.
VJY – 3.11.2016