“We continue to think a small gain is more likely than a decline over 2017” (Nationwide)
“The evidence we’ve been accumulating since the referendum has surprised to the upside. There’s been a greater resilience, in particular among the housing market, than we had expected…” (Andrew Haldane, Bank of England Chief Economist)
Did you delay or reverse your decision to sell your home in 2016 as a result of the vote to leave the EU? In the face of uncertainty and gloomy predictions about the impact on the UK property market, many of us became post-Brexit property casualties, with buyers pulling out of deals and chains falling apart at the last minute in the immediate aftermath of June 23rd
But as the Bank of England Chief Economist admits that there were significant errors in the institution’s Brexit forecasting, were the knee-jerk reactions right, and what does the future hold for those wanting to put their home on the market in 2017?
Andrew Haldane, Chief Economist for the Bank of England, admitted recently that they had ‘misjudged’ the impact of the Brexit vote on the UK economy. The bank has come under intense criticism for predicting a dramatic slowdown in the UK’s fortunes in the event of a vote for Brexit, only for the economy to bounce back strongly and remain one of the best performing in the developed world.
Many homeowners delayed their decision to sell their home or even took their properties off the market in 2016 because of dire warnings about a property slump and house price crash. One treasury report predicted a doom-laden scenario of an 18% price drop in house prices across the UK. However, the latest official house price figures from the Office of National Statistics showed that across the UK house prices continued to grow in the latter half of last year (albeit more slowly than normal). So, what’s the real story and what does this mean for home buyers and sellers in 2017? If you’ve been dithering about selling or buying this year…read on!
Unfortunately, the real answer as to the impact of Brexit is that no-one really knows…yet.
The key word for the property market in 2017 is ‘uncertainty.’ This has led to a broad range of opinions about the outlook for the coming year; however most agents and experts predict that we will continue to see modest growth outside London. Mortgage lender Nationwide believes house prices will continue to rise slowly in the coming year. Their chief economist Robert Gardner explains:
“We expect the UK economy to slow modestly, which is likely to result in less robust labour market conditions and modestly slower house price growth. But we continue to think a small gain (around 2%) is more likely than a decline in 2017 as a whole, since low interest rates are expected to help underpin demand, while a shortage of homes on the market will continue to provide support for house prices.”
House prices are predicted to grow again in 2019, but what if you don’t want to sit around and wait for two more years before moving to your next home? Life moves on, the world keeps turning, people swap jobs and family circumstances change. We all need somewhere to live, and many of us don’t have the luxury of just ‘waiting it out’.
The two most significant influences on the property market over the last twelve months have been Stamp Duty changes and Brexit. At the top of the market, increases in Stamp Duty brought in two years ago have had a significant effect, with prime property over £1m experiencing a slowdown. The higher rate of duty on second homes has also had a substantial impact on the Buy-to-Let market in key cities, after an initial flurry in March before the changes were brought in.
The slow-down in house price growth is better news for first time buyers, who still underpin the whole market. Property expert Henry Pryor says: “…as long as the Government continues to support first time buyers either directly via Help to Buy or by further tax changes then the market should not plunge.”
The weak pound has also prompted an increase in interest from overseas investors as the UK becomes a more attractive and affordable prospect. Areas with good commuting distance to London such as Reading, Didcot, Oxford and Swindon continue to be attractive to those seeking respite in the countryside with easy access to the capital. Zoopla reported that although London prices dropped by 8.7% in 2016, house prices continued to grow over the South and East of England and the West Midlands. This could well be due to the continuing shortage of housing stock which helps keep prices buoyant.
If Brexit has been holding you back, we firmly believe that there’s no reason not to put your home on the market in 2017. Rightmove’s latest reports reveal the housing market across the UK remains relatively steady. Interest rates remain low and there are some great mortgage deals available right now, many with fixed rates for as long as ten years.
Strong demand from buyers and a continuing shortage of homes means that properties for sale at a reasonable price should sell quickly. In this cautious buyer’s market, there are still deals to be made, but it’s crucial that your house is priced competitively and that it stands out from the crowd by being ‘show-home ready’ with great photos and marketing strategies.