The Property Market Overview - Spring 2017
Last year was a challenging one for the property market. It started with a surge in buy-to-let activity as buyers rushed to beat the stamp-duty hike for second homes and investment purchases. Inevitably, that burst of activity was followed by a lull. That was to be expected, but few could have predicted the outcome of the Brexit referendum. The ‘out’ vote caused uncertainty in the markets, and the result was more caution from purchases and a dip in prices.
So what’s for 2017?
Early indications are that the ‘reverse ripple’ seen in 2016 is set to continue. Last year house prices in Greater London performed better than those in Prime Central London. Haringey saw prices rise 7.2% between November 2015 and November 2016, while Waltham Forest and Newham were both in the top-five London Boroughs for price growth with rises of 13.8% and 16.3% respectively. According to data from Hometrack there were three London Boroughs where prices fell in January 2017: Kensington and Chelsea, Hammersmith and Fulham and City of Westminster.
John Williams, Head of Residential Sales at Outlook comments: “The regeneration of East London has provided a boost for prices – improved transport links are a big factor, as well as significant foreign investment in deprived areas such the Royal Docks in Newham. People have been priced out of the inner boroughs and it’s only natural that they start to look for better value. We think that prices in Greater London will grow this year, albeit at a much slower rate than we have seen over the last 2-3 years.”
However there are dangers. The Council of Mortgage Lenders’ Paul Smee comments: “The number of homebuyers in London fell to a four year low in 2016. Home mover activity in particular continues a downward trend, with the fewest loans since 1991. Persisting supply and affordability issues appear to be exerting an on-going restraint on growth, meaning there is some uncertainty around how the market will perform going into 2017.”
London’s renters have had a tough time in recent years - with demand outstripping supply, prices have risen steeply. However, recent data from Nested shows that they could have it a lot worse. London is the 11th most expensive city to rent in, that’s over 40% cheaper than San Francisco, and there are signs that things are starting to become easier. According to property website Rightmove, asking rents in London fell 4.4% in 2016, with most of the fall happening in the wake of the UK’s vote to leave the EU.
Outlook’s Director of Business Development, Daniel Barbanel comments: “London landlords have enjoyed strong rent increases for a sustained period, but the government have also made buy-to-let much less profitable with changes to stamp duty and mortgage interest relief. Landlords aren’t making as much money as people think - this could lead to landlords cashing in and selling their investment property, which in turn will decrease supply. The government needs to be careful not to drive landlords out of the market as this will send rents soaring again.”