How will the property market perform in 2017?
By Guest Blogger on 29 Dec 2016 in Industry News
By Maurice Kilbride, Managing Director of Maurice Kilbride estate agents
To predict what might happen in a national or local housing market over the next twelve months is incredibly difficult.
However, to take an educated stab you must first look at the prospects for the economy, as this dictates the country’s mood and how much money people have to spend. Doom and gloom headlines in the press or a rosy outlook can have a significant impact on consumer confidence, and this can directly impact on how house prices will perform.
2016 – The year that was
2016 was quite a turbulent year. Although, depending on which figures you prefer, property values still rose on average between four per cent and eight per cent to November, which was the weakest growth for over a year. Q1 showed a surge in activity and completion levels before the additional three per cent stamp duty hike on second homes came into effect in April. There followed an inevitable lull, but the market rallied later in the year.
The Brexit vote came as a surprise to many, not least David Cameron. And in the immediate aftermath, the FTSE 100 and Sterling crashed alarmingly. However, a few months on and the ship seems to have steadied and the muted 25 per cent drop in property values never materialised. If Article 50 is triggered in the spring as expected, this may cause more political and economic uncertainty, but I don’t see it affecting the housing market significantly.
The key is supply and demand
I was pretty hopeless at economics at school, but I do understand the basic premise of supply and demand. Ultimately, property values are affected by the number of properties available for sale verses the number of people looking to buy. People will always need to move – births, deaths, divorce, schools, employment – we’re much more mobile than previous generations. There’s a worrying shortage of property for a growing population. The government needs to hit their target of building 1m homes over the duration of this parliament, including more social and affordable housing.
The provincial markets will continue to blossom
One of the biggest issues is the variation in individual markets across the country. When the London market is factored out of any average house price indicator, many of the provincial markets are performing pretty well. Speaking locally, Manchester and Stockport are showing signs of some of the largest growth, and that’s set to continue as many London and overseas investors are looking north for better value and returns.
I feel the short to medium term outlook remains very optimistic as the supply of suitable properties shrinks further, which helps fuel artificial demand and house price inflation. The worry is if this is sustainable?
What is the outlook for first time buyers and second steppers?
For first time buyers, 2017 might be a good time to buy. Property portal Rightmove is predicting just two per cent growth in property values in 2017. Buying a property should always be a long-term investment – providing you do your due diligence on affordability should interest rates rise, as many experts predict it may towards the end of the year.
If you are a second or third stepper, what’s happening in the market is slightly less significant. If prices rise, the equity in your existing property also increases. If by chance the market did take a slight down turn in 2017, it could take a little longer to sell, so be prepared to price sensibly and it might be prudent to sell earlier in 2017 than later on. The key is to do your homework. Really get to know what is happening in your market, and choose a local agent to work with – someone who really has their finger on the pulse of reality.