Kate Faulkner on BBC News 21st July 2017

publication date: Jul 21, 2017
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

What's the current state of the property market

Following much talk in the media of a looming property crash, I was invited onto BBC News to talk about the state of the market and what we may expect to see in the months ahead.

With the number of property transactions falling for the third month in a row, it’s clear that some are seeing this as a worrying sign but considering the levels of uncertainty we’re facing in the wider economy, the market is surprisingly resilient.

  • 100,000 properties sold per month – lower than pre-credit crunch levels of 120,000-140,000 but still steady.

  • Prices are still rising but more slowly; 4.7% up in the year to May compared to 5.3% in the year to April (ONS).

How does that affect buyers and sellers?
Price rises of 3-5% may not be fantastic economically as they don’t encourage huge numbers of people to move – which injects a lot of money back into the economy – but it’s a nice, steady market if you’re planning to buy or sell.

  • Buyers don’t have to hurry too much because price increases are small

  • Sellers should have no trouble finding a buyer.

What if interest rates rise?
Most people are well buffered against interest rate rises:

  • 54% of people now own their home outright, according to the English Housing Survey, so would be unaffected by an interest rate increase.

  • Before the credit crunch, many borrowers were in a vulnerable position but lending today is much more responsible.

  • Borrowers are now assessed for their ability not just to pay back their loan at current rates but in the event of a rate increase.

What does the future hold?
It is expected that sales volume will drop by 10-15% in the next few years and that the falls will be across the board:

  • First-time buyers will be hit by harsher affordability tests.

  • Buy to let investors will be hit by higher taxation, and find it difficult to increase rents unless they are in a market town, where big rent increases are already being experience.

  • Good news for landlords is that demand for private rented property looks set to grow.

  • House prices in some cities should continue to do well – according to Hometrack, they are expected to rise by 6-7% over 2017, higher than the 4% projection made at the end of last year.

  • Other cities – including Newcastle, Glasgow and Liverpool – will take another two years to exceed their 2007 levels, and Belfast will take even longer.

  • Outside of cities, slower capital growth may prevent some people from moving home as they will have less equity to use to trade up.

  • The market may become dominated by new build properties, including shared ownership and affordable schemes.

  • While a steady market is good news for estate agents, the continued stock shortage will continue to make the market extremely competitive.

Should people panic?
Absolutely not. It’s when people panic and lots of vendors begin to reduce their prices that we get price market falls. Fortunately, people seem much more immune to alarmist headlines and more clued-up about the housing market as a whole. They know that property is a long-term investment and that, over the course of 25 or more years, they will inevitably see highs, lows and stable periods.

Buy to let tax - Nicholsons Chartered Accountants First-time buyer quick guide - Anthony Pepe Quick guide to buying and selling - SLC

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