Part 1: What to expect from the housing market throughout 2017
In part 1 of our 2 part series, the property experts here at Osprey have attempted to give you an overview of what you can expect from the property market throughout 2017. We want to arm you with the relevant information before you make any decisions about your own home or investment properties. There have been two significant influences on the property market in 2016: stamp duty and the EU referendum result.
The first big change, as mentioned above, was the Stamp duty change that was introduced two years ago. This has already started to have an impact at the top of the property market, where the upfront cost of buying a home has increased substantially. Another change, the introduction of a higher rate of duty on second homes, was introduced in April 2016, which has similarly affected the amount of properties being purchased by ‘smaller’ landlords (i.e. buyers looking to buy 1-5 second properties as buy-to-let investments.)
As most of us will recall, from the beginning of the year, the Brexit poll had triggered uncertainty in the property market as well as other key financial markets and the shock result ensured that the feeling will linger into 2017. This has had an effect on the British property market, and the below information (compiled by the Office for National Statistics) should give an indication of what we can expect to happen in 2017.
House prices (the below information has been compiled by the Guardian from a variety of government and trade body sources)
The official house price index, looks at the prices paid for homes and is published a couple of months after the data is collected. The latest figures, for October, show that across the UK prices were up by 6.9% year-on-year – the lowest figure since the end of 2015. The average price was £217,000.
Figures from all the main indices show growth has slowed since the start of the year. What growth there has been is a result of a shortage of homes for sale, according to the Royal Institution of Chartered Surveyors (Rics). For several months, it has reported a fall in the number of properties coming on to the market while buyer numbers have risen since the referendum.
Rics predicted 6% growth for the year, and the ONS figures are not far off. Simon Rubinsohn, chief economist at Rics, said 2016 had been “characterised by the stamp duty change” in April. “The stamp duty impact has been a much bigger factor in the profiles of activity over the year than the referendum.” For 2017, Rics has forecast growth will fall by half, to 3%.
The UK’s largest estate agency group, Countrywide, has a gloomier outlook and has predicted a 1% fall in 2017, with Brexit-fuelled uncertainty and higher inflation fuelling the drop. Its chief economist, Fionnuala Earley, said consumers faced rising costs, particularly for essentials like food and fuel. “These sort of things will be happening slightly later than expected,” she said. “They will make it more difficult for people to afford homes and also may make some people think twice about whether it is a good time to buy.
Whilst the picture looks bleak for many, here at Osprey Sales & Lettings we believe we have a solution that might not mean quite such a depressing outlook for all. If you’re looking to invest in a buy-to-let property (either for retirement, additional cash-flow, to get a better rate of return on your savings) then we believe that buying ‘smarter’ is the way to circumvent the increased Stamp Duty charges and still maintain an excellent ROI (return on investment) for your property.
At Osprey Sales & Lettings, we purchase and build property portfolios for many of our Rutland based clients, but the reality is- we don’t always buy in Rutland. Whilst property prices in the smallest county in the UK do appear to consistently stay ahead of the standard market rate (we’re forecasting property price growth of 7.9% in 2017), often the additional Stamp Duty charges, along with a different type of tenant clientele doesn’t always make this area the best solution for an investment property. This is largely why we opened up our Kettering office and our soon to be refurbished Hull office- with more than 20 years of investment experience behind us, we work tirelessly to identify areas around the UK that will give you a greater rate of return on your investment.
However, it is more than that, having the infrastructure in place to manage a national property portfolio and still maintain an independent agency service to our clients is really what has driven us from the start.
We are now in a period of huge growth, and can offer our investors the opportunity to build a positively cash flowing property portfolio and still be able to email, call or pop into one of our offices (located in Oakham, Stamford, and Kettering) to see us.