House price rises set to slow down
THE squeeze on households’ spending power is likely to mean house prices grow slowly or grind to a halt altogether in 2018, despite the market in Wales appearing positive.
Experts say uncertainty over Brexit and the wider economy, the first Bank of England base rate rise in over a decade pushing up mortgage costs for some borrowers, and stretched affordability as rising living costs bite, are all said to have added to a mood of caution.
There are also signs that house sellers are becoming less confident when it comes to standing firm on their asking prices.
Property website Zoopla has said more than a third (35.33%) of homes on the market in November had their original asking price reduced, marking a 1.25 percentage point increase compared with July.
It found that property values decreased in many parts of England but “solid gains” were seen in Wales.
New sales were also reported to be flat or falling across most regions of the UK, with the exception of Wales and Northern Ireland.
Jeffrey Ross director Ross Hooper Nash said of the past year: “As a business we agreed 20% more sales than in 2016, however the issue in Cardiff and I’m sure other parts of Wales is the lack of supply.
“Therefore, as a business, our completed sales were down compared to the year before but with the stamp duty changes coming in April we feel the start of 2018 will be very buoyant indeed with the middle part of the year slowing due to the uncertainty over Brexit.
“The smaller landlord will continue to feel the squeeze in 2018 with the mortgage changes so that will undoubtedly bring more property to the market, which won’t be a bad thing in our view.”
The Principality House Price Index for Wales said in October that the average house price in Wales was £176,316, an increase of £5,889 or 3.5% over the previous 12 months.
Pembrokeshire has seen its average house price rocket by 8.2% to £188,136 and prices in Bridgend were up 7.8% to £169,815.
In Cardiff, the average house price increased by 5.2% to £218,896.
This year saw a wide-ranging package of measures announced by the Government, including plans to boost housebuilding and a stamp duty cut for first-time buyers.
But despite the plans, the Royal Institution of Chartered Surveyors (Rics) believes house price growth will likely come to a halt in 2018 across the UK generally, with price growth in some regions offsetting a weaker picture in London and south east England.
Tarrant Parsons, Rics economist, told the Press Association: “From our surveys activity is quite subdued in most places, although pricing has been more resilient in Northern Ireland, Scotland, Wales and also north west England.”
Rics believes the stamp duty cut for first-time buyers is unlikely to stimulate housing market activity much overall, although it said affordability may improve slightly for the sector.
Meanwhile, Halifax Bank’s managing director Russell Galley said: “Overall we expect annual house price growth nationally to stay low and in the range of 0-3% by the end of 2018.
“The main driver of this forecast is the continuing effects of this year’s squeeze on spending power as inflation has outstripped wage growth and the uncertainty regarding the prospects of the UK economy next year.”
Housing market trends have been split geographically during 2017, with London in particular seeing a cooldown as other areas which are more affordable relative to earnings, such as Manchester and the surrounding north west of England region, have powered ahead.