How is the housing market likely to change in 2018?

The growth of house prices has slowed down over recent months, and with more uncertainty possibly in-store over the next 18 months, homeowners and buyers are contemplating how the market could change in 2018.

In this article we will take a look at the current climate, the potential changes ahead, and see what the experts think.

Firstly, how is the housing market looking right now?

Although it’s been temperamental recently, the growth in house prices rose surprisingly over the past few months, maybe due to a growth in employment levels and a drop in the amount of properties on the market. There certainly is a shortage - estate agents across the nation have been struggling to market new properties, and have been urging local homeowners to value and sell their homes.

Before this shock growth, house prices had slowed massively, fuelled by Brexit unease, slow wage growth and a drop in the speed that mortgage rates are falling.

Estate agent Jeremy Leaf said: “The recent house price growth has been driven by a shortage of supply, including housebuilding, historically low mortgage rates and relatively low unemployment, rather than strong buyer demand.”

Closing the gap

On a national scale, house prices grew 2.2% between the months of June and September, pushing the average cost of a UK home to £210,982. The inconsistency is the London region, which was the only part of the nation where prices dropped. These findings were somewhat of a shock - the capital was the worst-performing region for the first time since 2005.

Despite the price drop, London remains the most expensive place to buy a home in the UK, although the gap between house price growth across different areas is shortening. Growth rates in the south have slowed, while prices across the midlands and the north west have been increasing at a steady pace.

The millennial factor

The number of mortgage approvals dropped in June to a nine-month low of around 65,000. What’s more, property surveyors have noted a drop in the amount of new buyer enquiries. Estate agent James Pendleton said: “annual growth rate has been broadly shrinking like a tyre with a slow puncture since the middle of last year”.

The rate of home ownership is plummeting - sitting at a 30 year low. A key factor in this stat is that the average age at which people become homeowners is rising. Many people opt to carry on renting - be that out of choice, or simply due to high house prices, low wages and being unable to get a mortgage. It’s somewhat of a housing crisis.

So what does the future hold?

Despite Brexit negotiations running on until March 2019, on top of an uncertainty over our political future, property values across the nation are likely to grow over the next year or so. Countrywide has stated that they think house prices will go up another 1.5% before the end of 2017, and a further 2% by the end of 2018. This is a far slower rate of growth than in previous years, but a lack of housing supply will continue to enable these prices.

Because many buyers are choosing to stick rather than to move, house supply fails to meet demand. Additionally, changes to stamp duty have also meant a fall in the number of buy-to-let purchases. Worryingly, there are unlikely to be enough houses built over the next couple of years to fill the previous deficit.

It all hinges on Brexit

Which way the housing market is likely to shift crucially depends on the outcome of the Brexit talks, as well as the wider economy. The current unease is damaging the market, as people feel unsure of jumping into the property market or making a move until they are sure about the nation’s future. Once the talks have come to a conclusion, we’re likely to see a stabilisation of the market.

Matt Pool, Senior Consultant with Eddison Wells, had this to say about the future of the housing market: “I imagine we’ll see a similar trend that we have in 2017. With a lack of supply I’d suggest that prices are unlikely to drop as there may be a lot of competition between buyers for available properties.”

So, what could potential buyers or home movers do?

If you’re looking to make a move over the coming months, we’d advise that you be cautious, and do your research. Be confident in what you can and can’t afford, and to help ease your mind and find the best option for you, speak to an expert. Talking to a mortgage consultant can help you understand the market better, helping you make an executive decision that may fit you and your family.

• With a wealth of knowledge, Brighton’s Eddison Wells mortgage advisers are able to advise on a comprehensive range of financial products. Providing the highest quality service at the most affordable price is a prerequisite and a firm ethos. If you’re thinking of taking your first mortgage, call now on 0800 808 9981 - a member of their team will be willing to help, and provide advice based on your own circumstance.