What does 2016 hold for the UK property market?
2015 was a bit of a tough old slog for estate agents and buyers alike. Despite the mortgage market picking up somewhat, continued price increases and a dearth of properties coming to the market made for a pretty difficult year.
We saw a lack of affordable housing with young homebuyers being shut out of the property market, and older homeowners encouraged to ‘free up homes’ by downsizing to smaller properties.
With housing a key focus of the Autumn statement, it seems that in 2016, all eyes will be on the property market. So, what are we expecting to see, exactly?
Overall, we’re expecting a 4-5% rise in property prices, driven predominantly by the first quarter of the year.
The recent decision by the US central bank, the Federal Reserve, to increase interest rates for the first time in a decade, suggests that we might follow suit. A rise in interest rates has been bandied about for a while now, but low inflation – deflation, even – has held interest rates at their current low of 0.5%, with many economists suggesting that a rise wouldn’t happen until late 2016 or early 2017.
There’s no doubt about it though, an interest rate rise is at the forefront of people’s minds, and we’d expect to see that lead to an increase in purchases as people look to take advantage of low, locked-in mortgage rates.
Things are due to start getting tougher for landlords, too. From April this year, buy-to-let landlords and people buying second homes will have to pay a 3% surcharge on each stamp duty band. This, combined with potential cuts to tax privileges for buy-to-let investors due in 2017, looks set to give the property market a few jolts over the next year.
If I were thinking of purchasing a buy-to-let, I know I’d try to do it sooner rather than later, and this is likely to give quite an uplift to the first few months of this year.
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