Property matters: What to expect from the local market during 2018
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Homeowners should brace themselves for a petty lacklustre year as all the leading players in the property market resign themselves to price rises as low as one per cent in 2018.
The figure is well below average growth of between two and four per cent last year – and way below the four to six per cent we enjoyed in 2016.
What’s more, many are saying only the fact that there aren’t enough homes on sale to meet demand is keeping prices from falling.
It’s a view shared across the market nationally. Savills Research last month reported that the one per cent figure suggests the market was proving “stronger than expected”, rather than stagnating, as it suggested a year ago. And the team behind Nationwide’s monthly house price index agreed, but predicted long-term growth of between three and four per cent.
The Royal Institution of Chartered Surveyors’ (RICS) view is that the market will slow dramatically with sales volumes dropping from their current 1.2m to 1.15m. But only the supply shortage will prevent a significant drop in prices.
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Nick Leeming, chairman of Jackson-Stops, predicted a static market with what he called “punitive stamp duty levels and political and economic uncertainty weighing in”. But the rising cost of moving means home-owners are more likely to “stay put and renovate” next year.
All pretty consistent but what does it mean for Hertfordshire? Mark Shearing, managing director of Putterills, which has branches throughout North Herts, is optimistic.
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“I see a good, steady market with encouraging levels of demand - but no one is expecting any significant price increases,” he said.
“Throughout the county, we have full employment, a strong economy and lots of indications that people will want to move house.
“We’re lucky to be just outside the M25 as more and more people are being put off by the London excess and realising there’s much more value to living outside.
“Last year was difficult because of an election no one was expecting and a result no one could predict. But despite all that, we still sold more properties worth over a million in 2017 than we did the previous year.”
Savills Research predicts a more pessimistic 0.5 per cent growth figure for the East of England as a whole and doesn’t see the market recovering properly until 2020.
Graeme Warren, a senior executive with Savills in Hertfordshire agrees that price growth is likely to slow as uncertainty weighs on the market, driven by factors including the ongoing Brexit negotiations and interest rate changes.
And he agrees with Shearing that the stamp duty changes for first-time buyers will probably see more enquiries at the lower end of the market.
“However, these buyers will still face the challenge of raising a deposit, with the average first-time buyer deposit sitting at £25,652 outside London,” he said. “But we are anticipating that the ‘bank of mum and dad’ may be more willing now to help their children, as the majority will not see a portion of their cash going to the Treasury.”
Such uncertainty has a tendency to strengthen confidence in the local market, particularly in areas such as St Albans, where as we reported here recently, buyers tend to flee London to settle with families.
“We anticipate seeing continued demand for ‘fixer-uppers’ with buyer appetite remaining for projects and renovations,” he said.
“Buying a plot means that those moving out of London to the suburbs have the ability to create their ideal ‘forever’ home, in their perfect location. Downsizers consistently look in the area, so smaller properties and lock-up-and-leave apartments will retain their popularity.”
Another significant change is that the lower end of the market is increasingly coming back into the hands of the home-owner, rather than the landlord.
Figures from the Council of Mortgage Lenders show that buy-to-letters snapped up 120,000 houses as recently as 2015. But they expect this to dip below 80,000 in 2018, thanks to rising taxes and tougher lending criteria.
A sure sign of a market slowing is the number of properties being re-listed at lower prices. Mark Shearing’s point about being outside the M25 is no better illustrated than by a Rightmove report that found that more than four in 10 initial listings in London were revised downward in October, leading to an average price cut of 6.7 per cent.
The story was the same across two thirds of London boroughs, with Islington – a mere 11 miles from Borehamwood, for example - seeing the highest falls of 13 per cent.
So far, there’s little evidence of prices being dropped here, especially in the key areas where the market is traditionally strong such as in the school catchment areas around St Albans, Harpenden and Radlett for example.
In fact, Shearing reports that, “Welwyn Garden City, Stevenage and Hitchin are all picking up demand”.
The few revisions I’ve noticed in recent months tend to have been limited to those priced with a dollop of seller optimism or in the fringe areas where homes take a few months to shift at the best of times.
But it’s all a bit calm-after the storm. A quick play with the house price calculator used by home.co.uk shows that, in the 10 years to September 2017 – the latest month with figures available – the average price in Herts grew from £322,234 to £481,311 – a rise of 49 per cent.
The outlook isn’t all grey
In fact, the future’s bright and remarkably bold, according the experts who tell what to expect on the other side of the For Sale boards.
Mylands, the paint maker who leads the market on film set decor, predicts it’ll be a year that’ll see neutrals replaced by strong statement colours such as peacock blues and canary yellows like this Betty king size bed from Sofa.com.
The colour specialists Pantone have named their shade of the year as – wait for it -ultra-violet. The reason, they tell us, is that it “communicates ingenuity, originality and visionary thinking” in the way this wallpaper from Pixers.uk does.
But the buzz-phrase is, black is back as most interiors experts see it as the IT colour for 2018 and predict it will make its mark in terms of the way we decorate and furnish in the way Essential Home have done here.