What will happen to UK house prices in 2017? We look at six expert opinions
If you want to buy a four-bedroom property in London, you need a fat wallet – but maybe not as large as a year ago!
House prices for large family homes in the Capital dropped by 8.7% in the last 12 months, according to property experts Rightmove. According to Zoopla, property prices grew faster than in London in the east of the UK and the West Midlands.
In 2016 the Capital’s annual house price growth was 3.7% – which for the first time since 2008 was below the UK average of 4.5%. Source: Nationwide Building Society
In Radstock Street, Battersea, a new development of eight apartments will go on the market for £3.65m each in February 2017.
For most of us, that’s a huge price, especially when you realise it’s for a three-bedroom property. However, these homes will attract buyers who wish to downsize – homebuyers in their 50s – 60s who already own property in central London.
The concept of downsizing to a £3.65m home is a little strange by most standards. Still, the head of ‘search’ at Banda Property, Louisa Brodie, is quoted as saying, “these realistically priced apartments have car parking and a porter”.
Is this a sign that London is detached from the rest of the UK regarding property? Has this always been the case?
Despite the general reduction in activity around London, the average property price is still a whopping £474k which is more than twice the UK’s average (£217k). Source: Office for National Statistics (ONS).
But this slowdown has to be the result of the most significant change in the property market in 2016 – the 3% surcharge on stamp duty on second homes and buy-to-let properties. As a result, the rate for houses valued at more than £1.5m goes up to 15%.
|Stamp Duty Bands|
|Price band||Standard rate||Buy-to-Let/Second home|
|Up to £125,000||0%||3%|
|£125,001 to £250,000||2%||5%|
|£250,001 to £925,000||5%||8%|
|£925,001 to £1.5m||10%||13%|
This surcharge in April 2016 led to a surge of activity in March of that year, quickly followed by a significant decline in transactions the following month.
The new charge, according to experts, together with a rise in standard stamp duty fees for £1m-plus properties since 2014, has created a more significant impact on the UK real estate market than the Brexit vote in June 2016.
Ray Boulger from mortgage broker specialists John Charcol outlines that many homeowners with expensive homes decided to extend their properties rather than move house. The result of this has created difficulty in creating chains further along the line.
Since the United Kindom’s vote to leave the EU, chief property economist Ed Stansfield from Capital Economics says the market recovered “remarkably quickly” after its earlier cooling.
Other housing experts see the key to a buoyant property market as being first-time buyers.
First-time buyers will “underpin the wider market,” says Henry Pryor – the property buying agent.
Our experts have made a relatively broad spread of predictions for the year ahead in 2017 – from price rises to price falls.
And housing economist at Halifax, Martin Ellis, is hedging his bets with a rise prediction of between 1% and 4%.
Since purchasing a property is the single most significant financial commitment in most people’s lives, they will look for certainty in their job and income before making a house move, as will their mortgage lender.