The property market is one of the most closely-watched parts of the economy. Not only is this a useful gauge for the health of the nation’s finances but its fortunes are also key for families right across the UK who have their money in bricks and mortar.
Last year saw the Government change the rules for Stamp Duty and tax relief for property owners – as Simple Landlords explains in this guide – prompting a rush of interest in property in the first quarter.
So, what can we expect in the coming 12 months?
Modest price growth?
House prices did, in general terms, rise in 2016 and it’s a trend that many forecasters predict will continue in 2017. Yet even those predicting a growth in house prices do still think this rise will be fairly modest.
An article from This Is Money showed that the Royal Institution of Chartered Surveyors (RICS) thinks house prices will rise, Nationwide predicts a 2% increase and Hometrack thinks they will go up 4%. Savills suggests they will be flat, however.
Rents set to rise
It’s not just the price paid by buyers to keep an eye on – the amount of rent that is paid is also significant. One study from Landbay reckons that rent will increase by about 3% next year, well above the rate of inflation and about three times the amount it went up in 2016.
A plan for new homes
In the 12 months to September 2016 work started on almost 150,000 new homes, which was the highest rate since the financial crisis but also barely half of what some experts say is required.
With that in mind, in early 2017, the Government’s long-awaited Housing White Paper will be published. Communities secretary Sajid Javid promised that this will set out ‘radical’ plans to bridge the gap, which should look at everything from planning to funding the construction.
This might well not be the only announcement of 2017 either, with chancellor Philip Hammond due to make two Budget statements in the year, giving him ample chance to make further changes to the rules of the housing market.
Brexit means…?
The UK’s exit from the European Union is going to dominate headlines for years to come. It’s expected that Prime Minister Theresa May will trigger Article 50 to signal the country’s formal intention to leave the EU early in 2017 and that will begin an intense period of negotiations. Investors will be wanting to see some meat on the bones and a degree of certainty.
Good or bad, the ripple effect will quickly spill into the rest of the economy, including the housing market.
Regional variation
It’s also worth noting that there won’t be one clean narrative for the housing market in 2017. What happens to the luxury sector in London – in which a weak pound might tempt overseas buyers, or high prices might make would-be buyers turn their attentions elsewhere – will be wildly different to the effect in the towns and cities of northern England.
The Guardian reports, for example, that East Anglia, the north-west and West Midlands are all set to outperform the national average for growth in 2017.
