• Kevin Murphy

London Property 2017

LONDON - As the new year takes hold what can property investors expect for 2017? As is always the case forecasters are giving their predictions on the UK property market which saw its share of turbulence with the EU referendum and stamp duty especially in London where concerns of a weakening financial services employment situation could occur due to the June 2016 referendum.

So what can homebuyers and property investors expect for 2017?

Halifax Outlook

At the end of 2016 Halifax released its report on the housing outlook for 2017 in the UK. Not surprising the biggest concerns are economic especially withemployment and affordability issues.

Halifax’s housing economist, Martin Ellis: ‘The housing market is critically dependent on how the wider economy evolves. We consider it most likely that the UK economy will soften over the course of 2017. This is most likely to result from the weakening of sterling pushing up import costs and dragging on purchasing power, both for consumers and as a determinant of business investment spending.’

The report shows the disparities of UK price trends with strong prices being seen in the south of England with prices in Scotland lower as well as in the north of England.

For London: “Despite signs of cooling market conditions in the capital during 2016 – the annual rate of house price inflation in London has nearly halved from 14.5% in 2015 Quarter 4 to 7.9% in 2016 Quarter 3 – annual house price growth has remained above the UK average (+5.7% in 2016 Quarter 3).

In 2016 housing prices grew at an annual rate to 10.0% in March. Prices continued to rise as investors rushed to beat the the new stamp duty rates that took place in April.

Halifax is expecting a reduction in housing demand bringing forth lower sales and and a slowdown in the buy to let sector.

The buy-to-let (BTL) sector has seen annual increases in loans used to fund purchases of 21% in 2014 and 17% in 2015. A markdown on property costs as a result of the April 2016 of the stamp duty for BTL investors and the mortgage interest tax relief that is to start this year. For the first nine months in 2016 BTL loans were 3.5% lower than the same period in 2015.

It is predicted that annual house price growth will slow to 1 to 4% in 2017 due in part to the uncertainty of the economy, labour markets and Brexit negotiations.

‘The level of uncertainty around any economic forecast is higher than usual at present. It’s very difficult to predict the likely path for both consumer and business confidence during 2017, due to a wide range of possible outcomes regarding the extent of the expected worsening in labour market conditions and the size of the squeeze on purchasing power.’

Benham and Reeves Research

A report published by PropertyWire by Benham and Reeves indicates that an upturn in London’s lettings market is beginning to recover most notably in locations outside the central part of the city. Improved transport links and a robust local market saw rental rates increase especially in areas such as Colindale, north London, with increases of 4.7% and prime rental properties to the north of Oxford Street.

Areas in other districts in central London that had seen a downturn in rental values were now experiencing increases of the these values by 4% or more. One prediction has Wapping and the London Dock development which was set to open new units this January would also experience an increase in rental values.

Marc von Grundherr, the firm’s lettings director reports, ‘The research also shows that the average length of a tenancy in 2016 was 17 months. In years past, the average was less than a year. So while landlords are not able to achieve higher rents, their overall income is higher thanks to fewer and shorter void periods.’

As for 2017: ’We don’t want to be too optimistic just yet as things are still undeniably difficult for many amateur property investors but nothing could be as bad as 2016,’ he added.

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