You are here: Home - Mortgages - Buy To Let - News -

Stable, but modest housing market expected in 2018

0
Written by:
20/12/2017
Halifax expects annual house price growth to stay low and in the range of 0-3% in 2018, according to its UK Housing Market Outlook for 2018.

This will be driven by a combination of a shortage of properties for sale,  and continued low levels of house building, unemployment and interest rate environment, said Halifax.

Over 2017, property price growth fell from the 10% in March 2016 to a low of 2.1% in July this year, with a recent recovery to around 4%.

“Both demand and supply pressures in the market have altered little over the course of 2017,” said Halifax, which is likely to keep prices at the same level this year.

The stamp duty changes announced in the budget are expected to provide boosts to first-time buyer (FTB) demand – indeed, the number of FTBs getting on the housing ladder exceeded 150,000 in 2017 for the third time in four years – a level of momentum not seen since before the financial crisis.

However, while October completions rose to 105,000 – the highest recorded in 18 months, and total house sales in 2017 are expected to total around 1.23m – mortgage approvals and newly agreed sales fell.

Households are also in a financial squeeze – owing to inflation outstripping wage growth – alongside the broader economic uncertainty.

“Even with inflation expected to fall next year, household budgets are likely to remain strained in the absence of accelerating wage growth,” said Halifax managing director Russell Galley.

In the year to June 2017, there were 153,330 new builds completed – an 11% increase from June 2016 – with the government pledging to build 300,000 additional net new homes per year by the mid-2020s.

Nevertheless, price fluctuations are expected by be minimal, as “higher levels of housebuilding should help bring supply and demand into better balance and contain the upward pressure on prices over the medium and longer terms,” said the bank.

Galley added: “There is little reason to expect any fundamental shift in the key housing market drivers in the immediate future.”

The regional picture

Cutting against the grain of the past decade, price momentum was strongest in Northern England, but weaker in the South East and London.

The North saw the highest annualised growth in Q3 2017, at 9.1%, followed by the East Midlands and the North West. But London was the weakest at 2.6%, down from a peak of 21% in Q1 2016, while the South East grew at a slower pace than the UK as a whole for the first time in three and a half years.

Halifax noted that with average prices in London still 8.8 times the annual average earnings,constrained affordability means price growth will stay low.

Galley said: “Outside London, there are few signs of significant stresses and imbalances at present, limiting the risk of a sharp slowdown elsewhere.”

He continued: “UK house prices in general are likely to be supported, seeing modest growth in 2018, through the combination of a shortage of properties for sale, continued low levels of house building, low unemployment levels and finally, good levels of affordability due to the low interest rate environment.”

“A further rate rise is not seen as imminent and we may not see one until the latter part of 2018, if at all,” he added.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
The surprising reasons first-time buyers won’t qualify for the stamp duty cut

Stamp duty was cut last month for first-time buyers buying property worth up to £300,000. But there are surprising reasons...

Close