6 Factors that will influence the UK property market in 2018

January 8, 2018

 

 

1. Interest Rates

The Bank of England are expected to raise interest rates again in late spring by another 0.25% to 0.75%. In real terms thats between £0-£50 on most homeowner mortgages, but with more than half of all borrowers on fixed rate mortgages, most people will not notice the rise until they need to remortgage. With inflation still ahead of wages and a fragile economy, its unlikely that we will see more than this increase from the Bank of England this year.

 

2. Housebuilding supply is set to rise

The number of new homes built between 2016-2017 was up by 20% from the previous year. The 217,000 new homes brought to market brings the total annual number of homes built back to the same level it was before the Crash in 2008, however, it is still short of the Governments target of 300,000 per year.

 

3. First-time buyers overtake Landlords

Buy-to-Let Landlords were purchasing more than 120,000 properties per year using buy-to-let finance, however, the Council of Mortgage Lenders expects this to fall below 80,000 in 2018 due mostly to rising taxes under the Governments new Section 24 legislation and tougher lending criteria and stress testing, slowly tipping the balance in favour of first-time buyers and homeowners rather than investors.

 

4. SDLT & Help to Buy props up development

In one of our previous blogs we highlighted some of the changes in the last Budget in favour of first-time buyers. Philip Hammond abolished SDLT for all properties up to £300,000

 

5. Tenants find relief on rising rents

Rents in the capital have risen by over 45% over the last 10 years and it seems that Landlords will not be able to squeeze tenants any further for the time being. With salaries under pressure from inflation, its unlikely there will be any real rent increases in 2018.

The Government has also promised that the ban on Letting Agents fees will be triggered in 2018 which news welcomed by tenants, however, if these fees are just attributed to the Landlords, tenants will inevitably pay these fees anyway through higher rents. We will need to wait and see how this plays out.

 

6. Londons Nuovo Riche go higher

Many new residential sky-scrappers are either in planning, been agreed or are being built for 2018 and beyond. There seems to be no stopping the reach for ever higher residential developments and foreign investment pouring into London despite Brexit, the Recession, political uncertainty, the top of property cycle etc. 

Nine Elms gets a 56 storey residential development with prices starting at £800k and Docklands gets a 67 storey residential development with many units at £2m plus.

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