What will influence the property market this year?

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Your home may be repossessed if you do not keep up repayments on your mortgage

There are several factors that will influence not only house prices, but the availability of homes for sale this year:

Low interest rates

In late spring it is expected that rates will rise by an additional 0.25%, taking the base rate up to 0.75%. With more than 50% of all borrowers on fixed rate mortgages, most homeowners won’t notice this rise. There aren’t any further rate increases expected and mortgages will remain cheap, although inflation will outpace wage rises.

A rise in house building

Home building has increased; 217,000 new homes were coming on to the market in 2016-17, which is a rise of 20% on the previous year. Although this brings us back to the levels seen before the financial crash, it’s still short of the government’s 300,000 target. If migration numbers continue to fall and there is a continued increase in construction, supply could start to meet the demand for affordable homes.

First time buyers will triumph hover landlords

Buy to let lending is in decline, freeing up homes for first time buyers. In 2015, landlords bought almost 120,000 houses with buy to let finance but this is expected to fall below 80,000 this year. A rise in taxes and tougher lending criteria has tipped the balance in favour of homeowners.

Stamp duty cuts and Help To Buy

Stamp duty has been abolished for all properties up to 300,000 bought by first time buyers. This could save 20% of first time buyers up to £5,000. The Help To Buy scheme has also been given a boost of £10bn providing financing until 2021.

Relief for tenants

For many years landlords have been consistently increasing rents, but they are finding that they can longer push up prices. The average UK rents rose by less than 1% in 2017, and actually fell in London. Salaries are under pressure from inflation and therefore it is expected that rents will remain the same throughout 2018. There is also a new ban on letting agency fees, which will also help to keep rents down, although there is still no fixed date for the ban to be introduced, although it is expected to be this year.

If you are thinking of buying a property, whether it’s a first property or you wish to move up the property ladder, contact Derngate Wealth today.



February 23, 2018Danny PerryBlog

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