As another year draws to a close the property market has started to wind down in anticipation of the festive season. So all that’s left for eMoov CEO Russell Quirk to do, is dust of his crystal ball and look at what might lay in store for the UK property market during the year ahead.
It’s been a tough year for UK property there’s no doubting that, uncertainty in the market since the Brexit vote has been further fueled by a disastrous snap election result and many sellers have either held off on their sale or had to adjust their price expectations to see it over the line.
But the market has weathered the storm and prices have still seen an increase of around 4% since this time last year, despite many predictions of a doomsday style market crash.
How will the UK market perform in 2018?
A 5% increase in the average UK house price is a realistic expectation for the year ahead, not a return to its former glory but certainly a step in the right direction.
This growth will be largely driven by regions outside of the South where the cost of homeownership is lower and homeowners are more realistic in terms of the price their property may fetch. The West Midlands has seen a 7% increase since last December, largely driven by Birmingham, and should continue to exceed wider growth expectations during 2018 along with the East Midlands, South West and parts of East England.
While many are predicting a further reduction in buyer interest this continued price growth will be underpinned by the Government’s continued failure in providing a meaningful number of affordable new-build homes. Our exit from the European Union looks like it will take some time, but the thick fog of market uncertainty that has plagued the UK market since Brexit is already showing signs of lifting.
As it does the market will continue to gain momentum, albeit slowly, and the continued overflow of buyer demand to homes available will keep prices moving upwards.
How will the London market perform in 2018?
London has seen the most detrimental impact this year. The high price of property coupled with a fall in foreign investment in the top end of the market and changes to buy-to-let and second home stamp duty has resulted in the capital seeing the lowest growth of all UK regions.
Due to these influences, sellers are opting to sit on the fence rather than adjust their price expectations in line with the current market climate and this reduction in transactional volume is stifling
price growth as much as the lower sale prices achieved.
Of course, some areas have seen much healthier growth than others, but Kensington and Chelsea has been one of the worst hit, with prices down over 8% since December last year.
While it’s likely that the top end market will continue to suffer, and remain on life support for some time yet, prices across London should see an increase of 3% over 2018.
Will Interest Rates Increase Again?
We may see another slight adjustment to interest rates, perhaps another 0.25% increase, but the affordability of mortgages, coupled with the reduction in first-time buyer stamp duty should keep demand high. The lack of supply to satisfy UK home buyer hunger will also continue to stimulate prices and see the market regain momentum.
The Continued Disruption of the Estate Agency Sector
The online sector will continue to increase its market share through the use of technology and disruption of traditional industry practices and we are now starting to see the more bricks and mortar agents try and pivot with an online offering in one form or another.
Although the online sector has increased its market share dramatically in 2017, it’s still thought to account for just 5% of the whole sector. We believe the hybrid approach that we have developed at eMoov is the future of estate agency and offers the best of both worlds, and when this filters through to the consumer we predict the online/hybrid market share should at least double to 10% over the coming year.
We’ve seen the traditional sector previously try and evolve with the changing face of the industry through the OntheMarket portal, excluding online agents and restricting their member agents to listing on either Rightmove or Zoopla, not both. While they have failed to rival these portal giants, they have no realised the error of their ways as they approach a potential market float.
Should OnTheMarket.com float as planned, it will be a positive move for them and for the industry as a whole. While we’ve been critical of their head in the sand approach to disruption from the start, a float will see them drop the ‘no online agents’ and one portal rule and we’ve previously voiced that we will be first in line to join up with them when they do.
While they have become more of a niche portal rather than a force of nature like Rightmove and Zoopla, a more transparent approach will result in greater choice for agents, healthy competition for the portals and more importantly more choice for the consumer and the assurance that their property will be listed on all of the key sites, which is, of course, a good thing.
Will 2018 Be the Year of Estate Agency Regulation?
Finally, 2018 could be the year we see the implementation of licensing and regulation of the estate agency industry.
The Department for Communities and Local Government eluded to it a few weeks back and stated they wouldn’t need primary legislation in place before implementing it. Despite an improving image largely driven by the fixed fee, service-based agents such as eMoov, the industry is still crying out for proper regulatory standards and it’s something that we have been fully in favour of and called for on numerous occasions. Fingers crossed this could be the year we see it become a reality.