We were very pleased to be asked to provide a comment for the Expert Property Market Forecasts (2018).
In addition to high-level insights into macro influences, price and rental trends, it is interesting to see the experts delve into a number of specific topics. Examples include the notable demographic shifts occurring across the country alongside the real effects of the Universal Credit (UC) rollout, Local Housing Allowance (LHA) freezes and the widening risks of homelessness. The continued evolution of the build-to-rent, property crowdfunding and online auction sectors have also been explored in some depth.
For higher tax paying private landlords, taking heed of the intensifying effects of Section 24 of the Finance Act is frequently mentioned, as are some useful tips to best prepare, and indeed capitalise, for what look set to be a turbulent few years ahead.
Below is our commentary and you can view the full forecast by clicking the link at the bottom of the article.
The property market in 2018 is set to weaken caused by various factors:
- Uncertainty in the market caused by Brexit;
- Mortgage Constraints – this will have an impact on the amount that investors are able to borrow;
- Rising interest rates – interest rates have started to rise and will continue to rise gradually, this will increase the cost of borrowing;
- New taxation rules.
The above factors will certainly make investors more cautious in the short term. However, a low supply of stock means the market will continue to grow.
Estate agents Savills forecast in November that national house price growth will slow by half, growing only by 14.2%. Countrywide, the biggest agency in the UK, thinks prices across the country will go up by 2% in 2018, and Savills and JLL both predict a rise of 1%
The Nationwide Building Society reports that property prices have risen by 2.5% over the past year.
New BBC data shows that house prices are lower now than they were ten years ago in 58% of neighbourhoods in England and Wales.
In the North-East house prices in real terms have gone down in 95% of wards, and it’s the same story in Wales.
By contrast, house prices in London have gone up in 99% of all neighbourhoods in the last decade. However, Savills predict that house price growth in London is likely to be more constrained than the rest of the country by the factors above. In posh prime central areas, Strutt & Parker estate agency gives two scenarios: at best, prices will be static, but at worst they could plummet by 5%, depending on wider economic influences. Gloomier still is its warning that prices in prime central London could stagnate for several years.
Property isn’t always a good investment – unfortunately it’s no longer true that all house prices double every 7 years, despite what it used to be!
It’s going to be a bit more difficult to make money in property in the next few years, however if you are a savvy investor this is the time to pick up some bargains! If you do your research and due diligence, then there are some great property deals to be found. Property continues to be a great investment vehicle if you are an educated investor.
You can view the full property expert market forecast here.