Brum could buck trend as house price rises slow
THE squeeze on households’ spending power is likely to mean house prices grow slowly or grind to a halt altogether across 2018, according to experts.
But beneath the national figures there could be some strong regional variations, with cities such as Birmingham, Manchester, and Glasgow having been strong performers for house price growth recently as buyers look for value outside London.
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 that more than a third (35.33 per cent) of homes on the market in November had had their original asking price reduced, marking a 1.25 percentage point increase compared with July.
A survey carried out by the NAEA (National Association of Estate Agents) Propertymark has found a third (34 per cent) of estate agents expect cases of gazumping – when a buyer thinks they have secured a property only to be outbid – to decrease in the New Year, while the trend of renovating rather than moving is expected to continue as 60 per cent think more home owners will do this.
The housing market has been put firmly under the spotlight in 2017, with promises to fix problems and make life easier for those aspiring to get on the property ladder.
This year brought a wide-ranging package of measures announced by the Government, including plans to boost housebuilding and a stamp duty cut for first-time buyers.
Despite the proposals, 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, said: “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.
Halifax Bank’s managing director Russell Galley said: “Overall, we expect annual house price growth nationally to stay low and in the range of zero to three per cent 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.
According to property analysts Hometrack, London house prices typically reached a record of 14-anda-half times earnings in October.
Richard Donnell, insight director at Hometrack, said London house prices have already surged by 70 per cent since 2009.
He said: “In contrast, regional housing markets and cities outside the South East have further potential for material price increases as affordability is still attractive.
“In fact, large regional cities could register price rises of up to 25 per cent over the next two to three years.
“The likes of Manchester, Birmingham and Glasgow have seen market activity increase and this has delivered above-average price growth of six to eight per cent for the last 12 months.
“London is facing a drawn-out period where house prices and earnings need to re-align.”