What’s in store for the housing market in 2018?
By Guest Blogger on 19 Jan 2018 in Industry News
By Maurice Kilbride, Managing Director of Maurice Kilbride Residential Sales and Lettings
2017 was a pretty uneventful year for the housing market – prices didn’t do a lot, especially around London. In fact, the North performed much better in terms of percentage price increases, while London prices fell in real terms. Stamp duty, Brexit uncertainty and the first modest interest rate rise for a decade – with the threat of further rises in 2018 caused many to stay put and do alterations/extensions as opposed to moving.
Supply and demand
In 2017 there were 217,350 new homes built, which was an encouraging 15 per cent higher than the previous year and the second highest number since 1992. But it’s still below the Government target of 300,000 and is still not enough to satisfy the chronic shortage, especially as the number of second hand homes on the market remain so low – it fell for twenty-one consecutive months to November 2017.
Many estate agents anticipate this downward trend to continue. People will always need move – births, deaths, divorce, schools and employment, so clearly while demand continues to outstrip supply, prices will remain buoyant. I don’t see that changing greatly in 2018. The stamp duty changes announced in the November budget are not likely to have that much effect on supply, demand, or prices either as many first-time buyers find it difficult to raise a deposit.
If more isn’t done to help beleaguered house sellers and buyers, I fear there will become a generation rent in 2018. It would help if developers/builders were incentivised to build more affordable retirement style homes that attract our older generation to downsize and free up more second-hand homes to give the market impetus, but I think that’s unlikely as the present Government seem to be one howler away from going back to the country and another general election.
It might be a good time for private landlord investors to add to their portfolio. Obviously, tax changes will take effect from April, but rents are likely to rise as demand continues to rise. Manchester and Birmingham are anticipated to be the biggest growth areas for buy to let. We’ve seen a huge amount of interest in Salford Quays, including from foreign investors in recent months who are starting to look outside the capital for better value and returns on investment.
House price growth forecast
Most market forecasters are predicting modest growth in house prices in 2018. Nationwide, Savills and Countrywide are all suggesting as little as 1 per cent rises overall. The Halifax, clearly feeling more bullish are suggesting the growth could be as high as 3 per cent, but nobody is sounding overly optimistic.
When you consider the 3.9 per cent growth in 2017 and 6.5 per cent in 2016, there is an air of ambivalence as we head into 2018, and it looks as if it could be very much a case of the same again.