How will the property market be influenced in 2018?


Are you considering stepping onto the property ladder, move up or invest in 2018? 

There are several factors set to influence the property market this year, alongside the post-Brexit uncertainty and the ongoing pressure to increase tax payments of wealthy homeowners.

Here we will provide a short list of the top 6 factors to pay attention to in the coming year ahead…

  • Interest rates will stay low
    The Bank of England’s base rate of 0.75% is expected to make another rise of 0.25% in late spring, adding around £22 to the typical £175,000 tracker mortgage, but this is unlikely to be noticed as more than half of all borrowers are on fixed rates. However, due to the current weak economy, the market isn’t expected to make another rise across the year. Despite mortgages remaining cheap, the inflation outdoing wage rises may still make them feel like a burden for homeowners.
  • Housebuilding will rise
    New home building has picked up in recent years with around 217,000 homes coming onto the market in 2016/2017, a 20% rise on the year before. However, this is still a long way from the 300,000 target set by the government. If the ‘Brexit’ migration numbers continue to fall and construction activity increases, the supply and demand side of the housing market will be less urgent and pressing than in previous years.
  • Landlords may lose out to first-time buyers
    First-time buyers should be on the increase in 2018, with lending for buy-to-let schemes in retreat. As recently as 2015 landlords bought up around 120,000 houses using buy-to-let finance, but the Council of Mortgage Lenders is expecting this to fall below 80,000 in the coming year. With rising taxes and tougher lending criteria, the balance is tipping in favour of homebuyers as opposed to property opportunists.
  • Stamp duty cut and help-to-buy schemes will continue supporting developers
    Back in November 2017, Philip Hammond abolished stamp duty for all first-time buyers in properties up to £300,000 with immediate effect. This decision will save 4 out of 5 buyers up to £5,000. However, the Office for Budget Responsibility has predicted the move will raise prices by 0.3% in 2018. The Help-to-Buy scheme has been given another £10bn increase, providing further financial support until 2021, but critics have voiced opinions that it has been squandered in chasing the price of new-builds. 
  • Tenants may get some relief from landlords
    Finally, after years of rent increases, landlords are finding it difficult to rinse tenants any further. The average UK rent rose by less than 1% in 2017 and even fell in London. Salaries are under a considerable amount of pressure due to inflation and therefore few expect rent increases in 2018. No doubt tenants will also welcome the ban on letting agency fees when it eventually comes into play, with the government insisting it will be brought into action sometime this year.