As the green shoots of spring begin to show in gardens and hedgerows, well, at the very least, perhaps the occasional snowdrop, so our minds once again turn to the New Year, to new starts, planning ahead, and for many, the property market beckons.
Although the celebration and indulgence of the festive break is behind us, the ramifications of a turbulent year in the world of politics will undoubtedly continue to make waves. Not wishing to labour the point, or cover old ground, but who could have predicted, twelve months ago, that the outlook and uncertainties would be as they are today?
But what does this all mean for the property world? Will it become a “buyers’ market” this year? Are house prices about to take a tumble?
Aside from electoral turmoil, the property market saw some legislation changes last year. In April, the stamp duty threshold was lowered for buyers of second homes to £40,000 and a 3% surcharge was introduced. This has widely been blamed for a vast and rapid reduction in the number of properties being sold to buy-to-let investors, a fall of 63.7% in the year to November 2016.
You would be forgiven for imagining that this would lead to a fall in property prices, making 2017 the year to bag a bargain, but nationally, home values are predicted to rise by 3%. It doesn’t necessarily follow that this will be the case across all regions, and indeed some pundits have predicted a modest decline in the North East.
A so-called “buyers’ market” occurs when supply exceeds demand and there is a glut of properties on the market. Consequently, there is lots of choice, properties sit for longer on the market before being sold and prices become more competitive, hence the conditions favour those who are buying property. The opposite conditions make for what we call a “sellers’ market”. When demand is high but there are fewer properties on the market, driving interest and facilitating sales.
Very often, when considering moving house, we find ourselves in the position of being both sellers and buyers simultaneously. Most of us need to sell our existing home before we can buy another. The savviest might choose to sell when the market’s right, and rent until the conditions are on the side of the buyer. The difficulty lies in predicting if and when a change in market conditions might take place.
Misjudging the situation could lead to capital diminishing in value, especially when inflation, low interest rates, and the prospect of rising property prices are taken into account.
So, will 2017 be a buyers’ market or a sellers’ market? Well, it’s early days, and with uncertainty likely to be the dominant theme for the foreseeable, as the Chief Economist at the Back of England recently said, economic prediction has become more of an art than a science.