Your Guide To Property Prices in 2018
|Author: Craig Bees||Published: 9th January 2018 12:08|
A year ago, forecasts for 2017 house prices projected an increase of 4% on the basis of a continued pick-up in regional housing markets, offsetting weak price growth in London. Twelve months on, we expect 2018 to follow a similar pattern, with the UK’s top 20 cities forecast to register house price growth of 5% this year. And for the UK as a whole predictions are that house prices will increase by 3%.
Here Craig Bees, Managing Director of Bartram & Co, outlines three defining themes for the UK housing market in 2018.
1. First time buyers to become the largest buyer group
Property sales have remained around 1.2m for the last three years and I don’t expect this to change in 2018. Sales volumes have been falling in south eastern England and are down 16 per cent in London since 2014. However, first time buyer purchases have taken a growing share of sales and I expect them to be the largest group of buyers in 2018, accounting for over one in every three sales. Investors needing a mortgage will see a further fall in sales due to tax changes and low yields, affecting buying power in southern England. First time buyer numbers have fallen by 10 per cent in London over the last three years as affordability limits access to reasonably priced homes, however, I expect their numbers to continue to grow in regional housing markets, where affordability is more attractive.
2. Regional markets to offset weak house price growth in London
London house prices are up 70 per cent since 2009 but as above, affordability levels are stretched to an all-time high (14x earnings) with sales volumes down and house price growth (+2.9 per cent) failing to keep pace with inflation.
In contrast, regional housing markets and cities outside the South East have further potential for growth in house prices, as affordability remains attractive. Large regional cities could register house price rises of up to 25 per cent over the next 2-3 years. The likes of Manchester, Birmingham and Glasgow have seen market activity increase and this has delivered above average price growth for the last 12 months. London is facing a period where house prices and earnings need to re-align, indicating that house price growth will remain in low single digits over the course of 2018.
3. Rents to grow 2 per cent over 2018
Rental values have been growing at an average of three per cent per annum over the last three years, tracking growth in average earnings. Rental growth slowed in 2017 to 1.6 per cent across England and Wales, with static rents in London and the South East slowing down the headline rate of growth. The lack of rental growth in London is down to stretched affordability levels given that average rents in London are 47 per cent higher than a decade ago. Tax changes have led to much lower levels of new investment in rented homes, which is tightening supply and supporting rents. Growth is stronger in regions outside Southern England where rents are far more affordable relative to earnings. Overall, I expect average rents to rise by two per cent over 2018 with above average growth in regional markets.
Winter Viewings: interesting feedback from our column before Christmas about putting your property on the market over the festive period. If you have any questions about this week’s subject call us on (01327) 359164 or e-mail me at email@example.com and we will do our best to help.
Monthly draw: your chance to win a case of Italian wines (red/whites/mixed) or one month’s membership to Whittlebury Hall Leisure Club.
How To Enter: Every valuation and instruction for sale or rental between now and Friday January 26 2018 will be entered into the draw, the winners being notified by e-mail.
So if you’re thinking of selling or letting your property and want to win one of these great prizes on offer call (01327) 359164 and speak to our sales or lettings team.
Towcester Property News: January copy out now – don’t miss it. Delivered to all Towcester households, extra copies at Tesco and Co-op.
Until next time.
Craig Bees, MD Bartram & Co
E-mail me at firstname.lastname@example.org
Tel: (01327) 359164 Fax: (01327) 359166