Forecasting the future is never easy and if 2016 was anything to go by almost impossible even for the so-called experts. Not that this will stop us from trying and this is certainly the case when it comes to UK property predictions.
So, let’s take a brief look at what 2017 might have in store.
Predictions from Industry Commentators and Economists
Many industry commentators and economists have already issued a spread of predictions – from overall price falls to rises matching or outstripping the general level of inflation. Breaking down a few of these, Halifax’s annual forecast has outlined a house price rise of between 1 per cent and 4 per cent in 2017, marking a sharp deceleration from 2016. This prediction appears largely in line with many other forecasters. Nationwide is reported to be expecting a gain of “around 2 per cent” in 2017, while the Royal Institution of Chartered Surveyors (RICS) has suggested a figure of 3 per cent. However, in the negative camp, Countrywide has predicted a 1 per cent fall for 2017, citing Brexit-fuelled uncertainty and higher inflation.
Trade Body Forecasts
Looking ahead to 2017 and beyond, the overall CML lending forecasts are a little more pessimistic than a year ago. Having said this, the trade body was also at pains to point out that the housing market is still relatively well insulated from Brexit, especially when compared with other parts of the economy, as most activity is driven domestically. Despite property transactions being subdued through the second half of the year – even after accounting for the stamp duty distortions on buy-to-let – given robust demand, the CML forecast did not expect to see a fall in national house prices over the next two years.
The Government Agenda
UK property predictions aside, 2017 has begun with strong suggestions that tackling ongoing housing issues are high on the government agenda. In times past, these have been more about producing a strong soundbite, however there have been three housing specific announcements released only a matter of days after the New Year fireworks had faded over the Houses of Parliament.
Included in these are the planned construction of new “garden” villages and towns across England, the confirmation that thirty areas across England are set to receive funding from the £1.2bn “Starter Homes Land Fund” for new developments on brownfield sites and finally the government reiterating its commitment to affordable housing across different tenures. The affordable homes programme has been allocated £7 billion (£1.4 billion of which was announced at the Autumn Statement) and will now support the delivery of shared ownership, rent to buy and affordable rent homes. In addition, the upcoming housing white paper is highly anticipated across a variety of sectors and markets.
Of course, much can happen between announcements like these and their practical implementation. It will take time for these projects to have any effect on the market and certainly 2017 will see no benefit. However, if this is a positive sign of government intention and is followed up with more of the same, then 2017 will perhaps be seen as the year when housing was put back on the agenda in a meaningful way.
Continuing Concerns for Borrowers
There remain many issues for borrowers to overcome in 2017 affordability – including additional support for first time buyers, second steppers and other home movers and let us not forget the obvious affordable housing supply gap which continues to blight the overall housing market. However, whilst the aforementioned government announcements are longer term projects, which may or may not have a direct result on the housing market in 2017, they signify positive steps in the right direction. So, let’s hope that 2017 doesn’t spawn any major surprises to derail the housing market too much from what on paper looks like a slow and steady path.