The property market was left shaken and unstable in 2016 following the EU referendum in June.
As the months continued following the referendum, many estate agents saw a decline in the number of homes entering the market. People were scared to sell, but demand was still high as many mortgage lenders dropped their interest to on fixed-rate loans as the Bank of England cut its central rate to 0.25%.
With some lenders even offering historically low rates on 10-year fixed rate mortgages, this, combined with lack of houses on the market, managed to keep the housing market afloat into the new year.
But as 2017 has rolled around, what are we to expect over the next 12 months? Comparemymove.com reached out to some of the UK's top experts in property to find out their predictions for the property market in 2017.
“Sales transactions in London have dropped dramatically since the Stamp Duty changes came into effect in April last year, now down 60% in prime central London versus last year.
“With volume typically leading price, we do expect property prices to soften this year - especially in prime central London and the most expensive boroughs. We have already seen a year on year price drop in Westminster, and it is possible that this price correction could ripple out to greater London.
“We do however still expect certain hotspots in the outer London Zones - like East Croydon, Forest Gate and Leyton - to experience price growth - though perhaps not at the level we've seen in previous years.
“If you're planning on purchasing an investment property this year, make sure to buy in an area undergoing infrastructure investment or gentrification. That way, even in a weak market you'll still stand to profit from a boost in both rental yield and capital growth.”
“The private rented sector will grow more slowly in 2017 as tax changes deter landlords from increasing their portfolios. Over both 2017 and the longer term, this will result in higher rents being charged to tenants who remain in the private rented sector.
“With consumer confidence looking increasingly fragile, particularly in the face of rising imported inflation and stretched affordability, more sales stock will hit the market in 2017. This will further slow nominal house price growth and I would expect the average property price at the start of 2018 to be within 2% of that at the start of 2017.”
"2016 threw all it could at the UK property market and as a result uncertainty in the market probably cooled the pace of price growth a little. That said we are entering 2017 in good shape and we predict property prices will continue to climb throughout the year, although it is believed they will do so at a slower rate than 2016. A 4% increase is likely for 2017 and so UK homeowners should rest assured that their property based assets are still a strong investment going forward."
“Last year shook a lot of people up in property; mainly property investors and home movers. The changes in Stamp Duty and the EU Referendum are to blame but I think 2017 will be the year that we cut some slack and see some real change in the building of new homes and first time buyers.
“Once people realise that there hasn't been a whole lot change because of the referendum (especially when it comes to their property plans), there will be positive reactions across the country.
“I think we can expect to see a slight drop in house prices and mortgage rates as we see the calming of the sector. However, I have a feeling we may have a Bank of England fuelled shake up in Q4 of this year.
“All-in-all, the homebuyer “panic pull-outs” are over and with the increase in property related innovation, it's now easier to find a home, to save for a home and to get a mortgage without all the miss-information and ever time-consuming processes. The conveyancing process is even getting much easier and I think this is the year all of this will start to tie together, making 2017 the year not only to dream it, but to do it.”
“Property continues to be a reliable and tangible investment asset. However, due to increasing amounts of red tape, hassle, and upcoming changes to tax legislation in April 2017, traditional buy to let is no longer a viable option for many aspiring landlords. Property crowdfunding is a popular alternative for those looking for high yields and a hands-off approach.
“Whichever property investment method you choose, location is key. The further north you go, the higher the yields, and Greater Manchester offers the ideal combination of high yields and decent capital growth. Rents are predicted to increase by 5% in 2017, with capital appreciation set to reach 4-5%.”
“From our expanding customer base, it seems that people are still on the move across the UK. As Compare My Move continues to grow in popularity, I believe that people are starting to search for more cost-effective ways to move house as the pound's value continues to fall.
“Following what we have already seen in January, I predict that we will still see a steady flow of people choosing to buy or move house. As some big businesses are starting to look for other locations to move to from London, I think property prices in the capital will start to fall, causing those previously priced out to move back into the city.
“I think the amount of people moving abroad will remain at a steady rate – some will choose to make the move ahead of Article 50 being triggered, beginning the process of moving us out of the EU. Other people that may have previously wanted to move abroad may choose to stick with the UK on account of the sharp fall in the pound's value.”
“The stabilisation and slow-down of property values in London will encourage many to make the move out of the capital in 2017. The challenges will arise from the lack of properties on the market as well as the reluctance of vendors to price their properties competitively. Stamp duty changes had a significant early impact across the market, but we are now seeing the changes factored into people's budgets.
“The ongoing concerns about Brexit may lead to house movers being more conservative in their upper budget limit to ensure they have wiggle room but we don't foresee a slowdown in growth in the number of people making the move out of London.
“We believe that the spread of locations will increase with higher numbers of people branching out from the traditional and popular South West and South East to areas to the North and East of London which are likely to see higher numbers of movers over the course of the year.”
“Despite the doom and gloom surrounding the property industry, the rewards are there for the taking if you know where to look. Landlords are being hammered by the government and there is considerable uncertainty around Brexit but huge demand remains in the rental sector.
“As Warren Buffet said: ‘Be fearful when others are greedy and greedy when others are fearful.'
“Experts have a wide range of predictions for 2017 - from price falls overall to rises matching inflation. RICS forecast that the housing market is due to rise by 3% this year due to the supply shortfall which also means that rents will continue to rise. Martin Ellis, housing economist at mortgage lender the Halifax, predicts between a 1% and 4% rise.
“The UK needs more homes so the demand in the private rental sector is still there.
“There could be some fantastic opportunities for landlords who know what they're doing so being a professional and educated investor is even more important now. Make sure you understand all the changes that are happening in the industry in 2017 and the impact of those changes.”
“Following the landmark Brexit vote last year, it seems pretty clear now that 2017 will result in a Hard Brexit, and I predict that this will mean rental prices drop, especially within the capital.
“With many large organisations already saying they will leave London following a ‘Hard' Brexit, there will be fewer renters with the top salaries to support high rental prices that buoy the London rental market. That said, this will also see people take advantage of the falling rental prices in the upcoming months, moving to the pricier areas and then ultimately staying put for longer. Whist potentially good for the average renter, I predict this will make a big impact on the rental market overall with fewer high value transactions taking place.
“This atmosphere will inevitably lead to greater technological innovation within the property industry, as agents fight to stay competitive. To stay ahead of the game, and appeal to anxious yet technologically savvy consumers, agents will need to seriously streamline their activity, move away from archaic analogue processes and integrate or optimise existing technology in every part of their business structure. I predict 2017 will be the year the property industry truly embraces the benefits technology can bring to the sector.”
“It's true that the Government's so-called attack on buy-to-let landlords continues this year, with the forthcoming reduction in tax relief on finance costs and a possible ban on letting agent fees charged to tenants. Both of these measures are likely to force landlords to put their rents up, as they struggle to accommodate higher charges. Positively for tenants, however, landlords will be looking to secure longer-term tenancies to ensure that their finances are as safe as they can be in such uncertain times, while the rise of the online letting agent will make the process much cheaper for all involved.
“And rent prices may not surge quite as much as they have done over the last few years if recent forecasts of a London property bubble burst become reality; if London house prices plummet, this will filter out to the rest of the country and, unquestionably, to the rental market. As with concerns surrounding Brexit, 2017 shouldn't prove as disastrous as many fear.”
As the property market continues along its unstable path, it seems that many of our experts differed on their predictions for 2017.
That said, there are some similarities to be found among our expert predictions. Here's what we can take away:
Overall, our experts that were interviewed seem to believe that there won't be any sharp falls in property prices, as were first predicted in June last year.
Many homebuyers won't be put off buying a property because of low mortgage rates, which will hold up the market. Some buyers may simply look for more affordable properties, as well as looking to save money during their move.
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