First time lucky? Why new homeowners can rule 2018

The housing market has been sending out mixed messages recently.

On the one hand, there is talk of consumers being reluctant to make big decisions amid wider economic uncertainty and a squeeze on their living costs.

However, house prices have continued to climb in many areas, with reports of a lack of choice in popular locations.

So what’s in store for 2018? Here’s a look at the latest trends.

Will house prices rise this year?

Predictions have ranged from prices being flat across the UK to edging up by a few percentage points by the end of the year.

Economists believe the squeeze on incomes from inflation will limit what buyers are willing to pay.

Robert Gardner, chief economist at Nationwide Building Society, says: “How the housing market performs in 2018 will be determined in large part by developments in the wider economy. Brexit developments will remain important, but hard to foresee.” Does that mean growth is expected to be subdued?

The past year has seen big differences between areas of the UK in how the housing market has performed. The Royal Institution of Chartered Surveyors said pricing in Scotland, Northern Ireland and north-west England had been resilient compared with elsewhere.

While London has seen a cooldown, some other major cities, where housing affordability is less stretched, have been putting in a relatively strong performance. Will buyers have more opportunities to bag a bargain?

More house sales are now going through at less than the original price sellers had wanted, according to estate agents, so some buyers may find there’s more room for negotiation. But the supply of properties on the market is still tight in many places, so sellers in these areas may feel more confident in holding firm on price.

Across the UK, 85% of properties sold for less than the asking price in November, according to NAEA Propertymark. One in eight (12%) sold for the asking price, while 3% sold above the seller’s target.

How about first-time buyers?

There are plenty of mortgage options now available for people with lower deposits, while stamp duty changes are also benefiting first-timers.

Hometrack predicts this sector will make up the largest group of buyers in 2018. Richard Donnell, insight director for the property analysts, says: “We expect first-time buyers to be the largest group of buyers in 2018 accounting for more than one in every three sales (35%) and overtaking existing home owners (34%) as new purchases by investors fall in the wake of tax changes.”

What about mortgage deals?

Despite the Bank of England hiking the base rate from 0.25% to 0.5% in November, in general, the mortgage rates on offer are still “extremely low”, says David Hollingworth from broker London & Country Mortgages.

He says some rates on the fixed-rate mortgage deals on offer had started to edge up even before the increase.

Homeowners sitting on their lender’s standard variable rate (SVR), which happens after a particular mortgage deal comes to an end, may want to consider whether they can get a better deal, he says, adding that many lenders announced rate increases to their SVRs in line with the base rate hike.