Everybody likes to try to predict what is hapening in the property market for the forthcoming year.  The truth is nobody really knows but data experts Dataloft give us their thoughts and predictions for 2018.

Dataloft expects that UK house prices will rise in 2018 but only by a narrow margin – an average of around 1.8%, ranging from small falls in some markets – notably London, to a 5% uplift in others.  The Treasury, the Office for Budget Responsibility (OBR) and multinational professional services firm PwC have published slightly more optimistic forecasts for the UK average price growth, of 1.9%, 3.1% and 4% respectively.

An escalation in their forecast rates of growth could be triggered by successes in the Brexit negotiations and if economic indicators return to their pre-Brexit trajectories. Downside risks include significant job losses, rising inflation and rising interest rates – all of which will put a squeeze on affordability. New housing supply may also increase as the government continues support this ambition but it is unlikely reach a level which will plug the gap between supply and demand to a level which impacts pricing at a national level.

As ever, there will be significant variations at local level – these are, after all, forecasts of the national average. Local markets can outperform for a plethora of reasons, including: new train services, new employers, new visitor attractions and new housing completions. The national outlook is mostly driven by availability of mortgage finance and economic confidence – if either are low, demand subsides.   

To put forecasts in context, we need to reflect on the state of the market at the end of 2017. The prospect of Brexit and associated economic uncertainty overshadowed the UK in 2017. In the light of this, the UK housing market was surprisingly resilient and continued to gain value, albeit at much reduced rates of 2.4%/2.5% according to Halifax/Nationwide, or 4.5% based on Land Registry/ONS.  In fact, the pace of growth exceeded some expectations, Savills, for example predicted 0% growth in 2017 but fell woefully short of others, such as the OBR’s prediction of 6.5% growth.

For good or bad, housing and house prices were high up the political agenda in 2017, culminating in the abolition of stamp duty for first time buyers in November, for purchases up to £300,000 (or the first £300,000 for properties up to the value of £500,000). Other notable policy interventions targeted the buy to let sector, creating further disincentives to private individual landlords and effectively reducing competition for owner occupiers.

In London, affordability (the ratio between house prices and earnings), or lack of it, began to impact house price growth and the market experienced a significant cool down. We expect the slow market to persist, to give house prices and earnings time to realign. For that reason alone, the UK mainstream market is likely to outperform the London in 2018. The prime London market is also under pressure, still reeling from the shock of further stamp duty changes that affected the top end of the market.

Our national forecast of 1.8% growth in 2018, is based on the signals from these leading indicators: economic growth; interest rates and affordability and sentiment. 

The outlook for the UK economy remains uncertain in the lead up to Brexit and wage growth is likely to be muted as a result, although no sharp falls are expected. All economic indicators are expected to pick up momentum once a Brexit deal has been completed.

Inflation has eaten into household earnings. Any rises in interest rates will push up the cost of borrowing (even if gradually) and, although still low compared to the long term average, it may mean some aspirational homeowners find that they are out of reach for qualifying for a mortgage under the stricter assessments regime introduced after the Global Financial Crisis (GFC) in 2008/9.  

Even so, there is room for further house price growth outside of London, as affordability has not been as stretched, particularly in the midlands and more northern regions. Hometrack’s latest Cities Index highlighted that house prices are growing the fastest at a city-wide level in Edinburgh and Glasgow.

The RICS monthly agent survey gives a useful indication of sentiment in the sector. Opinion on the prospects for house price growth was negative in November 2017, for the fourth consecutive month.

There are also other indicators that impact at a more localised level such as the performance of the London market on the region’s commuter zone, levels of new housing supply, infrastructure improvements and policy affecting sub-markets such as buy-to-let.

While there are variations in the house price forecasts for UK house prices for 2018, as is shown by the individual forecasters contributing to the Treasury consensus (i.e. from negative figures to +4%), Dataloft predict that average prices will rise by low levels again this year (1.8%).

The outlook for UK house prices for the next few years is likely to be a period of continued and prolonged period of low levels of house price growth. Unlikely, however, that we will see price drops across the board although this may happen in some markets.  Through our local research we are able to provide bespoke property research for your area so just email me at katie@sawdyeandharris.co.uk to request your FREE local research to see exatly what is happening with house prices for your village, town or city.

Source: DATALOFT INFORM

A sale falling through can be a seller's worst nightmare. It can set your home search back by months and could cost you money. Thankfully there are some things that you can do to prepare yourself for the possibility and to avoid a sale falling through. 

Surveys 

If something unexpected and potentially costly comes up in a survey, it may make the sale fall through. Remember to do your own survey, pick up on any issues and get your paperwork in order before going to the market. 

Chain

A break in a chain can happen for a range of reasons, from people changing their mind to pulling out because of financial problems. Choose an experienced estate agent, like a Guild Member, to help monitor the chain and keep your sale on track. 

Negotiation 

Negotiations can be a tricky time, and you can find yourself dealing with surprising demands. Try to be flexible, and remember that a few small details should not make-or-break your deal. 

Good preparation and keeping calm should keep your sale on track. If the worst happens, get your home back on the market as soon as possible.  To give your deal the best chance of succeeding, choose your local Guild Member Sawdye & Harris to sell your home.

Source: Guild of Property Professionals

Moving to a new area can be a daunting prospect. There is nothing that will make your new house feel like a home like making new friends and getting involved in local events. Being involved in the community can bring a sense of belonging, fill your social calendar, and make it easy to find friends. But how can you tell if an area has a good community spirit before you move there?    

• Visit local community centres, sports clubs, church halls, cafés, and local shops to see what’s going on. Find the notice boards for information on local groups and events.
  
  
• Talk to the local people on the high street. If they are happy to stop and help a stranger, it’s a sign that the community is open, friendly and trusting.
  
  
• A lot of community planning has now moved online. Try searching for Facebook groups and small websites with the name of the town or village. Look at how active the pages are to see if people are engaged.
  
  
• Pick up a local newspaper to find out about upcoming local events. Plus, it’s a good way to find out about the crime rate in the area.
  
  
• Speak to Sawdye & Harris, your local Guild Member, as will know the area like the back of our hands and have a finger on the pulse of local activities.  We are more than happy for you to quiz us during a property viewing, or why not call in and see us when you are in the area.

Source: Guild of Property Professionals

Residential property is gloriously diverse and long may it be so. Even homes created from a single set of architect drawings, or built as terrace can, like the Doctor’s Tardis, be marvellously individual on the inside.

There are so many ways to alter a property. The same short description ‘three bed terrace’ or ‘four bed semi’ might gloss over a kitchen extension, an en-suite carved out of a master bedroom or a knock-through kitchen diner. All of which makes analysing average prices on a truly like-for-like basis, increasingly difficult. A one bedroom penthouse apartment and a small one bedroom flat are both defined as ‘flat’ in Land Registry data.

Measuring price per sq ft goes a long way to addressing these anomalies. For estate agents valuing a property, it makes comparisons far more precise and £ per sq ft is an essential metric for investors and housebuilders in calculating land values.

Central London buyers have become familiar with it as a way to compare capital values, driven partly by the expectations of overseas buyers who tend to ask for price per sq ft. Developers using modular construction techniques can talk about the size of their homes before committing to particular room layouts – and, in time, movable internal partition walls could become more common to allow homes to adapt to changing household circumstances.

The Dataloft map of £ per sq ft also raises interesting questions about why prices differ from place to place. It is no surprise to see an enormous red area covering London, indicating high values per sq ft, but it is also clear that high values are not confined to the South East. Nor does it necessarily highlight the most obvious hotspots outside of the South East.

If average prices were mapped, we would see hotspots in places with very large homes, like Alderley Edge in Cheshire. But our map shows very distinct hotspots in the Lake District, North Norfolk, the North and South Cornish coast and Bristol. Some of these are in places with small but sought-after homes, like picturesque villages in National Parks, that have a high value per sq ft.

Using the Energy Performance Certificates published by DCLG, it is now possible to assign a size to every sale transaction recorded at the Land Registry by matching the two data sets. This means it is possible to analyse the average price paid per square foot for cities, postcodes, counties or regions across the country.

This Dataloft map shows average £ per sq ft house prices, across England and Wales, based on an analysis of 470,000 sales recorded so far in 2017.

While there is a clear pattern of high values weighted towards the South East, the price per sq ft tone associated with the wider South East is replicated in pockets across the UK. In fact, every region has at least one pocket of yellow and there are clusters around York and Harrogate, the Peak District and Cheshire.

But if affordability is the driver, it is clear that the North East, North West and Wales continue to be the UK’s most accessible housing markets. It is interesting to speculate on what HS2 could do to this map when it reduces rail journey times to London, and also what influence it might have on the emerging trend for young professionals, priced out of London markets, to buy property elsewhere and rent somewhere to live in London.

From hotspots in the Lake District and second home destinations in North Norfolk, to higher values in established commuter towns in the South, this analysis gives a new way of exploring the housing market for sales and lettings.

Source: Dataloft Inform