Tepilo analyses some of the predictions and forecasts for house prices in 2017.
The festivities, fireworks, over-eating and present-opening are now over and done with, and we have entered the start of a new year. 2017 is highly unlikely to be as topsy-turvy, dramatic and unpredictable as 2016, but who can say anything for sure anymore?
As you would expect, the start of a new year also brings with it all manner of predictions, projections and forecasts. None more so than when it comes to that perennial dinner-party favourite topic of conversation: house prices.
Most commentators and industry experts anticipate further house price rises in 2017, with most suggesting a slight 1% to 2% increase.
The Royal Institute of Chartered Surveyors (RICS), a body which predicted a 6% rise in house prices for 2016, expects prices to increase by a more modest 3% this year.
A lack of supply, a squeeze on affordability for first-time buyers and a continuing reliance on the Bank of Mum and Dad for mortgage deposits should all see prices growing, as demand continues to outstrip the available homes on the market. This is even allowing for the government’s various affordable housing schemes and its attempts to increase home ownership across the country.
Elsewhere, Nationwide expects house prices to rise by 2% in 2017. Robert Gardner, Nationwide’s Chief Economist, believes the outlook for 2017 will depend heavily on how the wider economy fares, with a greater degree of uncertainty surrounding it than usual as Britain negotiates its withdrawal from the EU.
While the bank expects growth in the UK economy to slow slightly in 2017, it also believes a small rise in house prices is more likely than a fall. Historically low interest rates – recently cut by the Bank of England to 0.25% - will help to keep demand high, while a lack of available homes will force house prices upwards.
High-street lender Halifax, meanwhile, predicts price rises of between 1% and 4% in the next 12 months. Martin Ellis, housing economist at the Halifax, attributes this broad forecast to the ongoing economic and political fallout from Brexit, with uncertainty over the prospects of the UK economy in the year ahead. The shortage of homes in Britain – both new build and existing stock – will help to keep prices buoyant, the Halifax suggests.
The UK housing market stayed remarkably stable and robust in the aftermath of the shock EU referendum result, but nervousness surrounding the economy and buyers potentially exercising caution over stretching themselves too far – until more is known about Britain’s new relationship with Europe, at any rate – is keeping house prices steady.
The predictions of our very own Sarah Beeny are broadly in line with those of the organisations detailed above.
“I believe we’ll continue to see house prices going up in 2017, although the rate of growth will slow, which is what’s been happening for the past few months," says Sarah.
"And this is good news, because it means price rises will happen at a much more sustainable level."
Our Tepilo founder believes that steady but slower growth presents a win/win situation - existing owners will continue to benefit from capital appreciation, while those looking to take their first steps on the ladder may find it easier to do so than in the last couple of years.
The Council of Mortgage Lenders also predicts a more subdued market in 2017, with Brexit, property taxes and wider economic uncertainty all factors behind this. The CML has revised down its original estimate of the number of housing transactions in 2017, from 1.26m to 1.17m.
This is in part put down to the economic uncertainty surrounding Brexit, and in part down to tax changes and new regulation in the property and mortgage markets, including the additional 3% stamp duty surcharge on second homes, changes to the Wear and Tear Allowance and stricter lending criteria for all kinds of borrowers.
In 2018, the CML expects housing transactions to again fall ever so slightly, to 1.155m.
All in all, as a seller you should be optimistic about house prices remaining broadly the same – or increasingly slightly – and you should also be confident about achieving the asking price or above for your property. As usual, a bright, clean, attractive home will have far more appeal than one which is merely going through the motions.
January is a particularly good month in which to sell a property, giving you the opportunity to pounce on buyer interest cemented over the festive period. If you haven’t already brought your home to market, it may be a wise decision to do so now.