The abolition of stamp duty for most first time buyers in the UK should help to boost the housing market at the beginning of 2018 but overall next year is expected to be steady and stable.
The latest outlook report from agents Winkworth which is represented nationwide more first time buyers should lead to higher transaction levels further up the ladder. The Government’s promise to build more homes is also a positive for first time buyers looking to take their first step onto the property ladder, while an increase in stock levels will be welcomed across the market.
But there will be variations, the report points out. In London, as the ebb and flow of Brexit negotiations continues, the report predicts that market sentiment will be similar to this year, with prospective home movers uncertain of the economic outlook.
It also explains that affordability is still an issue for London buyers. ‘We expect attitudes towards moving home to remain cautious. With buyer interest at an historic low, we have experienced low levels of transactions and we expect this to remain the case throughout 2018, albeit picking up modestly from this year’s levels,’ the report says.
‘The announcement of no stamp duty payable on properties under £300,000 for first time buyers and available on all properties up to £500,000, should increase buyer interest levels at the lower end of the market, thus encouraging home owners to consider moving. Overall, prices are expected to reduce by 3%,’ it adds.
The prime central London market is expected to fare slightly better and the firm believes that transactions will increase and houses prices will be stable. Overseas buyers continue to take advantage of the depreciated value of the pound, which has led to a 7% increase in activity this year, as well as fewer price reductions compared to the broader London market.
‘The prime central London market has adapted well to choppy conditions, with tax changes being successfully absorbed into pricing. It is fair to say that a positive outcome for Brexit could move the market in central London significantly, so this will be something to watch closely in 2018,’ the report explains.
The country market is showing a more positive outlook and Winkworth offices have experienced an upturn in activity in the latter part of this year. ‘There remains, of course, some uncertainty among both buyers and sellers, but with many benefiting from the changes in stamp duty and with affordability being less of an issue we expect this upturn to continue,’ the report points out.
‘We do not expect real price growth in the country next year, but with more affordable house prices than in London, this should lead to increased interest from buyers and a rise in transaction levels, particularly supported by those moving out of London to upsize,’ it adds.
In the lettings market demand for rental property in London is likely to remain high and this is expected to keep rental prices firm in 2018. The report explains that the buy to let sector has been affected by several changes to Government policy and legislation over the past few years, most recently the changes to mortgage tax relief and the 3% stamp duty surcharge and landlords are now feeling the effects of this.
‘As a result, supply of rental property across London is likely to decrease as many landlords take the decision to leave the rental market following these unfavourable changes which will, in turn, lead to rising rents further down the line,’ it says.
In prime central London, rental prices are expected to fall about 2% and the bulk of letting activity to come from apartments rather than large family homes. ‘We are seeing a significant increase in activity from technology companies relocating their staff to central areas, but a decrease from the finance sector where many companies are adopting a wait and see approach and delaying relocating staff until there is a clearer path to Brexit. The finance sector currently accounts for 20% of the relocation sector and the technology sector for 15%,’ the report adds.
In 2018 the rental market in the country is expected to follow a similar trend to this year. Rents should rise slightly, in line with wage inflation, while subdued conditions in the residential sales market are likely again to have a positive effect on activity within the rental market.