Property sales predictions for 2017
The number of people buying homes is expected to fall in 2017, as landlords and owner occupiers are deterred in the wake of the tax changes and economic uncertainty, following the EU referendum result.
The number of transactions is predicted to fall to 1.17 million according to the Council of Mortgage Lenders (CML), the lowest point since 2013. This level is lower than the 1.26 million which it had forecasted the previous year – an amount the CML stated was “partly relating to the economic uncertainty from the EU referendum, but also because of tax and regulatory changes in the housing and mortgage market”.
A higher stamp duty was introduced in April, which caused the upfront cost of purchasing investment property to grow.
Rules around landlords’ tax relief will be changed and gradually brought in from April next year, with those buyers being subject to harsher checks prior to being given a mortgage.
1.25m worth of transactions were forecast by the CML for 2016, along with £237 billion worth of mortgage advances. As the year comes to a close, the level of sales looks set to fall slightly but with an increase in lending, at 1.23 million and £246 billion respectively.
Also coming in lower than the forecasted amount was the number of homes being repossessed by lenders, reaching just 7,900 as opposed to 18,000.
The CML also expressed that the position of the housing market was similar to that of the economy, in that it was more stable than expected despite being slightly subdued.
Although statistics since the referendum result have indicated the economy performed better that had been predicted, the uncertainty of the outlook was likely to continue for the following few years as a result of the Brexit vote, according to the CML.
The Council also stated that a period of adjustment would be experienced by the UK, where both unemployment and inflation were predicted to rise.
Due to the rise in stamp duty, housing transactions were distorted, as many purchases were brought forward, but the CML have stated that the activity has become more subdued and that this trend, which started in the spring, had softened.
Commenting on the market’s stability despite the referendum induced uncertainty, was Paul Smee. The Director General of the CML stated: “The housing market is relatively well insulated from direct Brexit effects as most activity is driven domestically, but it is not immune from more generalised economic uncertainty.
“And we expect any modest strengthening in homeowner lending to be offset by a less active house purchase market in buy-to-let, as both tax and regulatory changes bite on landlords.”
Managing Director of broker Private Finance, Simon Checkley also commented on the lack of market activity forecasted in the coming 12 months:
“Aside from the surge in buy to let we saw earlier in the year as landlords clambered to beat the Stamp Duty deadline, lending figures have showed little movement each month.
“I don’t expect we’ll see much in the way of change over the next 12 months compared with 2016. Indeed, we are likely to see inflation rise further in 2017, which will impact on consumers, so lending might be flat at best.”