Leading online estate agent, eMoov.co.uk has teamed up with the Home Owners Alliance to provide their property predictions for the coming year where the level of construction by the Government, house prices and interest rates are concerned.
eMoov founder and CEO, Russell Quirk and Head of Research for Home Owners Alliance, Katherine Binns provided the following predictions on the UK and London markets, as well as London’s high-end market.
Do you think UK house prices will go up or down next year and by what percentage?
I think the market will remain fairly healthy, however, the rate of growth enjoyed by homeowners this year is likely to ease off. A +4% increase is a fairly sensible assumption given current market climates.Russell Quirk
We expect annual house price growth of 4% in 2017 nationally. Despite the slower pace home formulation will continue to outstrip the number of new homes being built and in turn keep prices on their upward trend.Katherine Binns
Do you think London house prices will go up or down next year and by what percentage?
Despite the seemingly invincible nature of the London market I believe homeowners could be in for a shock in 2017. A combination of knock-on effects from stamp duty changes and market uncertainty towards the back end of 2016, could see prices across the capital fall by -4% at least.Russell Quirk
London as a whole should see prices remain steady or increase slightly. The Land Registry place London price growth at 7.7% for October but we expect this to fall to 3% over the next 12 months.Katherine Binns
Do you think prime central London house prices will go up or down next year and by what percentage?
London’s top-end homeowners have had a disastrous year with prices and demand falling drastically across prime central London. It has been without a doubt the worst hit because of the second home tax changes as well as the reluctance of foreign buyers and a further -10% drop is very realistic for 2017.Russell Quirk
Prices in prime central London will no doubt drop due to the higher rate of stamp duty and the uncertainty caused by the Brexit vote. Rightmove reported a 4% drop in December with LSL also reporting four out of five of the most expensive areas have seen prices falling in the last month. Transactions and demand levels are trailing other areas and so it seems likely prices will continue to fall, 2017 could see them do so by a further -5%.Katherine Binns
What will happen to interest rates in 2017?
Once the nation has shrugged off the myth that is Brexit angst I believe we will see a slight hike in interest rates, however, it’s likely this will only be marginal and they should return to 0.5%.Russell Quirk
There isn’t much room to go down so any change is likely to be an increase and will probably see them return to 0.5%.Katherine Binns
The Government have set a self-imposed informal target to build 200,000 houses. How many do you think they will actually build during 2017?
Top of every property professionals Christmas wish list is that the Government might actually fulfil their promises where building property is concerned. In keeping with tradition, I don’t think they will. They might manage around 150,000, but this will still be well short of their target of 200,000.Russell Quirk
The Government have yet to achieve 200,000 new homes in any year and if anything, this year will be harder for them to do so than ever before. We believe they may scrape over the 130,000 mark, but not much further.Katherine Binns
Please provide a short comment on what you think 2017 has in store for the UK market and what will be the biggest influence on it.
I think it’s more of a case of what won’t influence it. As the market emerges from its winter hibernation and the renewed January activity provides a well-needed boost to activity from both buyers and sellers, the uncertainties of 2016 will be a distant memory. The out of kilter see-saw of buyer demand outstripping supply will continue to stimulate prices, albeit in an unhealthy matter.Russell Quirk
Activity and pace of house price growth likely to pick up in the early part of 2017 as buyers and sellers decide to get on with their home moving plans. However, the market is likely to be tempered throughout 2017 by ongoing uncertainty around Brexit and stretched buyer affordability. The impact of inflation and possible interest rate rises are also likely to reign in activity but we would expect the ongoing imbalance between buyer demand and housing supply to keep upward pressure on house prices. We would expect house prices to rise on average 4% in 2017 (they have risen on average 5% in the past 12 months) – http://hoa.org.uk/services/house-price-watch/Katherine Binns
Please provide a short comment on what you think 2017 has in store for the London and high-end London markets and what will be the biggest influence on them.
Changes in the market, coupled with increasingly unaffordable prices, have made London a lot less appealing over the last year. It will, as it always has, remain one of the strongest markets in the world. That said, in 2017 we could see a price correction across London and one many struggling aspirational homeowners will welcome.Russell Quirk
Where we see buyers returning to the market is in areas that offering relatively better value (outer London and neighbouring regions to London). Agents are reporting that over-priced property is not selling. The extremely high price of property in prime central London, coupled with high stamp duty rates puts it in the bracket of ‘high-ticket’ items with which people are taking greater caution. While the weaker pound may make property in London cheaper for foreign investors, we expect to see prices fall further in the months ahead.Katherine Binns
What does the public think?
eMoov did invite a number of other property professionals to share their wisdom, however, a few declined to be involved and the majority simply didn’t reply. So, with those in questions firmly struck off eMoov’s Christmas card list, they decided to ask six other alternative “property experts”.
In an attempt to put the debate straight to bed, eMoov asked Josie, a psychic from the Circle. Rather disappointingly her exact words were “I don’t know, I can’t answer that”. She also had trouble providing the lottery numbers so the call was ended.
They then asked a selection of other (real) people for their predictions on annual house price increase in 2017, the results of which are below.
The UK house prices will increase by +5% nationally.Fred
I think prices will exceed this year by an additional +3%, climbing +8% over the year.Chantelle
I believe prices have already climbed at too high a rate and think 2017 will see them continue to do so into double figures (+10%).Steve
I also believe house prices will continue to climb at a higher rate than 2016, up +9% during 2017.Trevor
I think the market is going to see a fall of -6% over 2017.Clive