2016 was a year of political surprises and economic uncertainty for the UK property market. What is the outlook for 2017?
According to the National Association of Estate Agents (NAEA) the number of transactions will remain steady throughout 2017 with house price inflation remaining low.
Number of first-time buyers to increase
43 per cent of their member agents expect prices to stay the same and there are expectations that this will encourage first-time buyers to enter the market. The figures back this point of view with 29 per cent of NAEA agents expecting sales to first-time buyers to increase. Presently help for first-time buyers is focused on new builds, but the NAEA believe we should now focus on helping the group to buy older properties. Existing buildings that require refurbishment are better value for money in the long term.
New house-building targets
Every time the Government defines its new house-building targets, the NAEA applaud their efforts, but they still haven’t seen a significant increase in the number of properties being built. The NAEA wants to see these promises converted into bricks and mortar for a better housing market for all.
No property Armageddon
Mark Hayward, Managing Director, NAEA, said: “It would be an understatement to say this year has not gone as expected. However, the property market is mostly still feeling the effects of events which happened last year. The high end London property market is suffering at the hands of increased stamp duty taxes, and while Brexit uncertainty definitely hasn’t helped repair this, it’s not the sole reason why London’s more expensive properties aren’t being snapped up at the same speed they were. Next year, we expect it’ll be more of the same; there won’t be a ‘property Armageddon’, but things won’t get much better for first time buyers, and those looking to up or down-size.”
Association of Residential Letting Agents (ARLA) predicts that the number of new rental properties coming onto the market will fall next year, as a result of the increased stamp duty surcharge on additional properties
Upward pressure on rents
37 per cent of agents envisage supply falling with 52 per cent of member agents expecting rent prices to increase in 2017. There will be an upward pressure on rents due to lower stock levels, combined with mortgage interest relief and the ban on letting agent fees. Competition will be high in 2017 with demand continuing to rise, and with less stock available for prospective tenants. Due to the rise in landlord taxes in 2016, landlords may be forced in 2017 to sell some or all of their buy-to-let properties and exit the market. For prospective new investors, it will be more difficult to obtain buy-to-let funding throughout the coming year, as lenders increase their criteria.
Ban on letting agent fees
David Cox, Managing Director, ARLA, said: “Our private rented sector report findings over the past few months have been positive and we were confident approaching the end of the year. However, following the announcement of an outright ban on letting agent fees during the Chancellor’s Autumn Statement, we expect rent prices to rise and tenants to be forced to look for properties in cheaper areas. The government continues to lash out against the private rented sector to cover its own failure to build the number of homes this country needs. Such policies will have a detrimental effect on the very people the Government aims to help the most. As a result, we predict 2017 will be a raw year for renters. We now need stabilisation from the government before tenants are squeezed dry of every penny.”