Alastair Woodgate, Director of local chartered surveyors and estate agents, Rumball Sedgwick, summaries the property market in 2016 and where it could be heading in 2017, particularly for first time buyers.
“There were two significant influences on the housing market in 2016: the introduction of a higher rate of Stamp Duty on second homes and the Brexit poll which triggered uncertainty in the market that will linger into 2017. But nationally, house prices were still up by 6.9%. What will 2017 have in store?
Much is written about the luxury end of the market but this isn’t the important sector as we head into 2017. First-time buyers underpin the housing market. So how will they fare?
There’s now a better chance of getting on the property ladder than for many years. Interest rates remain low, mortgage lenders are keen to lend and stamp duty changes have reduced the number of buy-to-let investors. But buying will remain a challenge in our district where prices are historically high and where first time buyers may find it even harder to raise sufficient deposits, despite higher than average earnings.
Relentless rises in house prices has contributed to a huge squeeze on home ownership rates among the under-25s. In two decades, the proportion of young people owning their home has fallen from 46% to just 20%, while property prices have soared by 475%.
In 2016, 190,000 homes were built in England but there’s a need for 300,000 homes a year. Proposals for 14 new garden villages and three garden towns will create 48,000 new homes, but the effects won’t be felt in 2017 and won’t impact on the market locally. So the supply problem will persist and that will sustain house prices, which, in our region, have defied the worst predictions in the light of the EU referendum.
For 2017, most experts think growth will slow but remain positive, with increases of around 2-3%. This growth will come because demand for housing remains well above supply. So affordability will remain very much to the fore, creating difficulties for first-time buyers whose incomes may fall in real terms. Many will continue to rely on the Bank of Mum and Dad for help with raising a mortgage deposit, while others will look to Help-to-Buy schemes.
So it seems unlikely that 2017 will see a swift solution emerge. If 2016 is anything to go by there will be lots of surprises. But one thing never changes: people will still want roofs over their heads and more affordable homes will be required, particularly for first time buyers. In the world of housing, that is where Government energies must lie.”