As 2017 arrives, and we say goodbye to 2016, we enter the new year with slight apprehension and a paused breath, as the United Kingdom prepares itself for more uncertainty in the housing market. Britain has had many changes affecting the property market, deepening the crisis that has plagued this sector for a long time. Let’s review what the UK property market has had to deal with this year and what it means for 2017.
The Guardian has noted in an article in the last month of the year that house prices continuing to rise on a yearly basis has contributed to the worsening housing market. However, growth has slowed due to a shortage in homes going up for sale, according to data released by the Royal Institution for Chartered Surveyors (RICS). In its records, it has reported a fall in the number of properties coming on to the market in the last several months, whilst the numbers of buyers has risen since June 2016. RICS has predicted that next year that growth will fall by 3%, as chief economist for the professional body, Simon Rubinsohn says that this year had been characterised by the stamp duty change back in April. ”The stamp duty impact has been a much bigger factor in the profiles of activity over the year than the referendum,” he continues.
The article also makes mention of the affects of the luxury market from the stamp duty hike, with sales of homes over £1 million slowing to a halt, as well as uncertainty from Britain’s decision to depart from the European Union in the referendum in June of this year and high inflation proving to further deteriorate conditions in the housing market. Price cuts in some expensive developments, as well as adjustments being made to new builds so that apartments are smaller and cheaper to purchase. Stamp duty has had a greater impact on the buy-to-let market though.
We have reported many a time about the damage the stamp duty increase has been dealt to the buy-to-let sector. It has not been a pretty sight for the housing market, and many landlords were hit by the worst changes ever to hit the housing market in decades. If this year was bad, many are predicting next year could be worse, with tougher affordability checks for buy-to-let mortgages and the beginning of the withdrawal of tax relief on mortgage interest. The Council for Mortgage Lenders (CML) has predicted activity to slow as a result and that 2015 will be seen as the high watermark for buy-to-let purchases.
As there are less buyers for properties, this has meant an increase in the rental market. Property agent Savills forecasts rents across the country will rise by 2.5%, due to higher earnings, especially in the capital. And for building of new properties, many commentators predict that 2017 will start with fewer homes being built because of the Brexit uncertainty and rising inflation.
The UK braces itself for more decisions to affect the housing market, all we can do now is wait and brace ourselves for impact, and observe what the new year will bring.