What’s next for house prices and what will happen to the property market in 2018?
How will a Stamp Duty cut and a lack of supply affect the property market next year? We ask the experts
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FROM the end of stamp duty for first-time buyers to the tenant fee ban, there are plenty of positives for the property market next year.
But there is plenty that could hold it back. So, what does 2018 hold for housing? We take a look.
House prices will go up, but at a much slower rate
A lack of supply and ongoing Brexit uncertainty are all expected to weigh on house prices next year.
Nationwide expects growth of just 1 per cent in 2018, compared with 2-4 per cent for 2017, while surveyors also expect pretty flat growth due to a lack of supply and people not moving unless they really have to due to high inflation and a more cautious political and economic climate.
Tarrant Parsons, an economist for the Royal Institute of Chartered Surveyors (RICS), said: “Following a pretty lacklustre finish to 2017, the indications are that momentum across the housing market will be lacking as 2018 gets underway.
“With several of the forces currently weighing on activity set to persist over the near term, it’s difficult to envisage a material step-up in impetus during the next twelve months."
The past 12 months has seen a regional divide emerge with price growth slow in London and the South East but increases in areas such as the Midlands and East of England. This is expected to continue in 2018.
Buying agent Henry Pryor said: “The housing market is over-cooked. A decade of rising prices, a doubling in the South East is coming to an end. Houses are going to once again be homes rather than investments.
“Almost everyone who is predicting rising prices sells something - homes, mortgages, financial services and is a born optimist.
"The reality is that prices are becoming unaffordable for many and markets always adjust to compensate. Hold on, 2018 may be a bumpy ride.”
Alex Gosling, chief executive of online agents HouseSimple, added: "We are entering the unknown, because Brexit is just around the corner, and no-one can say with any certainty what impact this unprecedented event will have on the wider economy, and how that will feed through to property prices.
"The property market relies on confidence and the clearer the EU picture is, the more confidence buyers and sellers will have to commit.”
Fewer people will move home
Estate agents reported property stock was at record lows during 2017 and Mark Lawrinson, of London agents Portico, warns transactions and prices could be hit by home owners choosing to stay put and take advantage of low mortgage rates to remortgage instead.
He said: “Rather than accepting a lower price than they’d like for their property and forking out on moving costs and stamp duty, homeowners are choosing to remortgage to make what they’ve got cheaper. It’s low mortgage rates and a lack of housing that’s propping up house prices.
“In fact, the only reason why property transaction volumes aren’t zero, is because people have to move because of lifestyle changes - getting married, starting a family, divorce, and death.
“We’re in a stalemate position, and we’ll likely remain in it for the next 12 - 24 months.”
A stamp duty boost?
Chancellor Philip Hammond gave first-time buyers a boost during his Autumn Budget in November when he abolished stamp duty up to £300.000.
Mark Peck, head of residential sales at estate agents Cheffins, says this could unlock blockages across the whole market.
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He sid: “If we can kick-start mobility, this ought to free up additional homes to the market, helping second-steppers and upsizers.”
But the Office for Budget Responsibility has warned the exemption will just push prices higher, while Nationwide has warned many first-time buyers already pay below the property tax threshold anyway.
The end of tenant fees?
Renters are still awaiting the government’s promised tenant fee ban that was promised in the 2016 Autumn Statement.
A draft law was introduced in November, that would scrap tenant fees and cap security deposits at six weeks rent, but still needs to go through Parliament.
Trade body the Association of Residential Lettings Agents (ARLA) is advising its members to prepare for the ban to be introduced in October 2018.
But this may not all be good news for renters.
ARLA has warned that costs such as tenant referencing and inventory checks will be passed onto landlords, with 59 per cent of agent warning this would then be shifted to tenants.
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