The Property Outlook – Autumn 2017
Following June’s surprise General Election result it’s been a summer of political uncertainty. But what impact, if any, will this have on your local housing market?
It’s been a confusing summer for buyers and sellers – are house prices growing, slowing or falling? Media coverage and market commentary sometimes give conflicting messages. John Williams, Head of Residential Sales at Outlook believes it is all a matter of perspective: “If you compare today’s prices in outer London boroughs with prices 12 months ago they’re about 3% higher, which is healthy growth. However, a few months back year-on-year growth was about 4%, which indicates growth has slowed, a more cautious way of looking at exactly the same figures. To confuse things further, some data sources show that prices in recent months have fallen slightly, so even though your three-bed semi in Walthamstow might be worth £20,000 more than it was a year ago, when you open the paper there will probably be a story about having fallen”.
What we know for certain is that the number of property sales has fallen. Figures provided by the Office of National Statistics show that the number of transactions in May was 96,910 – the first month this year that transactions have fallen below 100,000. So is this a supply or a demand problem? The experts think it’s both. The Halifax says demand is weaker owing to a cocktail of slow wage growth, a rise in prices in the shops, and affordability concerns. So, if demand has fallen, why aren’t prices slumping? The Royal Institute of Chartered Surveyors (RICS) believes that dwindling supply is cancelling out the effect of lower demand and supporting prices: “Record low stock numbers, political uncertainty and the aftermath of tax changes are obstacles hindering the UK housing market, with price growth and sales activity subdued.”
When it comes to the immediate future most experts are predicting more of the same – a slowdown in growth with prices in outer London boroughs broadly flat. However, there are those with a more pessimistic view. Ratings agency Moody's says that house prices are now likely to fall outright.
After a period of falling rents, in London prices seem to have levelled out. Daniel Barbanel of Outlook commented, “There was an oversupply in the market caused by investors rushing to buy before the stamp duty hike last year. That has eased and rents are now steady at around 5% below their peak”, but he also warned, “Landlords should be aware that renters still have more choice than in previous years – if you want to get the best tenants you have to offer good value or make sure your property is one of the best on the market”. Rics said it expected rents to rise no more than 2% nationally over the next year. “Although tenant demand continued to edge higher, it did so at the slowest quarterly pace going back nearly 20 years.”
If you have any questions, then please get in touch and one of our experts will be happy to help.