What’s ahead for property mar­ket in 2016?


Harefield Gazette - - UXBRIDGE PROPERTY -

THE fact that house prices will con­tinue to rise is no se­cret. There is sim­ply no good rea­son why they wouldn’t – de­mand from buy­ers is stronger than ever, there isn’t enough sup­ply to sat­isfy the de­mand, and there are nowhere near enough new builds. But how much will they rise by?

“I be­lieve house prices will rise by 5–10% in most of the towns we cover and the in­creases will pre­dom­i­nantly be seen in the first half of the year,” com­mented Ro­mans’ man­ag­ing di­rec­tor Peter Coles. “Higher in­creases will pre­vail in towns that are at­tract­ing more com­pe­ti­tion be­tween first time buy­ers and in­vestors, in­clud­ing Bas­ingstoke, Brack­nell, Guild­ford, Maiden­head, Read­ing and West Dray­ton.”

West Dray­ton has al­ready ex­pe­ri­enced a 14% in­crease in house prices in the last 12 months, and with the ar­rival of Cross­rail, the on­go­ing re­gen­er­a­tion of for­mer in­dus­trial units and the ex­pected ex­pan­sion of Heathrow Air­port, Ro­mans predicts that prices here will in­crease by an­other 10% in the com­ing year.

The lower end of the mar­ket will ex­pe­ri­ence more ac­tiv­ity with gov­ern­ment Help to Buy schemes, in­clud­ing Help to Buy ISAs, and parental sup­port help­ing first-time buy­ers onto the property lad­der, but buy­ers need to act quickly, says man­ag­ing di­rec­tor of res­i­den­tial sales Vin­cent Court­ney.

“For the past 18 months we’ve been ex­pe­ri­enc­ing faster sales than ever be­fore, with new apart­ment blocks sell­ing out on the day of the launch, one and two bed­room apart­ments reg­u­larly re­ceiv­ing of­fers above ask­ing price, and town cen­tre ter­raced houses cre­at­ing bid­ding wars at our property auc­tions.”

More com­pe­ti­tion be­tween first-time buy­ers and in­vestors

Chan­cel­lor Ge­orge Os­borne’s 3% sur­charge on each stamp duty band where the property is be­ing pur­chased as a buy-to-let in­vest­ment or as sec­ond home could re­sult in even more com­pe­ti­tion be­tween first-time buy­ers and in­vestors.

“We’re ex­pect­ing to see a surge of in­ter­est from in­vestors look­ing to pur­chase in­vest­ment prop­er­ties be­fore April 2016, in or­der to avoid the ex­tra charge,” added Vin­cent.

“I understand the frus­tra­tion of first-time buy­ers who are of­ten com­pet­ing with in­vestors. Con­cen­trate on or­gan­is­ing your fi­nances be­fore you even start look­ing; this will put you in just as good a po­si­tion as land­lords, and demon­strate that you’re a se­ri­ous buyer.”

At the up­per end of the scale, de­tached prop­er­ties are sell­ing more than any other property type in most of the ar­eas Ro­mans cov­ers.This is partly down to Lon­don home movers leav­ing the cap­i­tal for sur­round­ing re­gions in search of more cost-ef­fec­tive property.

The Thames Val­ley and sur­round­ing ar­eas are property hot spots that at­tract many peo­ple mov­ing away from Lon­don.The up­per end of the property mar­ket tends to be slower but with con­tin­ued de­mand from fam­i­lies mov­ing away from Lon­don, com­pe­ti­tion re­mains strong, and down­siz­ers are en­joy­ing fan­tas­tic cap­i­tal growth.

The 2015 Stamp Duty Land Tax changes were great news for 98% of home pur­chasers. How­ever, those buy­ing prop­er­ties worth more than £937,500 now have more stamp duty to pay; some­thing which has af­fected the mar­ket in Lon­don par­tic­u­larly. Al­though there’s very lit­tle ev­i­dence to sug­gest this has made a dif­fer­ence in the South East this is a trend to watch out for dur­ing 2016.

Rapidly ris­ing in­ter­est rates a ma­jor threat

“To­day’s mar­ket­place is very much in the favour of sell­ers, how­ever, I ex­pect in­ter­est rates will be­gin to rise in 2016, reach­ing 1% by the end of the year,” said Peter Coles. “We know it will have to hap­pen soon and once the rates be­gin to rise I be­lieve a lot of peo­ple who were sit­ting on the fence will de­cide to make their move.”

In­ter­est rates aside, com­pe­ti­tion be­tween mort­gage lenders is cur­rently ex­tremely fierce and peo­ple are get­ting some out­stand­ing deals; whether they’re first time buy­ers, re­mort­gag­ing, or pur­chas­ing buy-to-let prod­ucts. As the smaller, spe­cial­ist lenders con­tinue to make their mark, the com­pe­ti­tion will con­tinue, and new cus­tomers will ben­e­fit from ex­plor­ing the mar­ket thor­oughly or seek­ing ad­vice from an in­de­pen­dent ad­viser.

Rental yields to in­crease by 5–10% in 2016

Av­er­age rental val­ues across the ar­eas Ro­mans cov­ers are all higher than the na­tional av­er­age, and with ten­ant de­mand in­creas­ing it’s in­evitable that rents will rise.

“I pre­dict we will be see­ing at least a 5% in­crease in rental yields by the end of 2016, with higher in­creases in the sec­ond half of the year fol­low­ing any rise in in­ter­est rates as land­lords will start to ex­pect to re­cover in­creases in mort­gage costs,” com­mented man­ag­ing di­rec­tor of let­tings, Peter Fuller.

Now that mort­gage in­ter­est tax re­lief is re­stricted to 20% for buy-to-let land­lords, they may – de­pend­ing on tax sta­tus – face sig­nif­i­cantly higher tax bills..

The stamp duty sur­charge, which comes into play from April 2016, will also in­crease each band by 3% where the property is be­ing pur­chased as a buy-to-let in­vest­ment or sec­ond home.

Peter Fuller added: “This may not be pos­i­tive news for land­lords, but it’s im­por­tant to note that buy-to-let is a long-term in­vest­ment and in that sense it can still be very lu­cra­tive; with house prices pre­dicted to rise by around 25% in the next five years, on­go­ing de­mand from ten­ants, and the low buy-to-let mort­gage rates cur­rently avail­able.

“In­ter­est­ingly, al­though there are con­cerns through­out the in­dus­try about the con­stant leg­is­la­tion changes, we haven’t ex­pe­ri­enced any drop in de­mand from in­vestors dur­ing 2015 and I don’t think this will af­fect the let­tings mar­ket as much as some ex­perts are pre­dict­ing dur­ing 2016.”

Do you plan to sell or let property in 2016? To speak to a Ro­mans property ex­pert, call 01344 985 666.

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