07 Mar 2017

UK property market: what to expect in 2017

UK house price market growth has slowed down in the last few years and marked only a 5.1% increase in prices between February 2016 and February 2017. That is the lowest annual rate in the last 4 years. According to the most of the expert this is a tendency that will stay through the year. “A sustained period of house price growth in excess of pay rises has made it increasingly difficult for many to purchase a home. This development, together with signs of reduced momentum in the jobs market and squeezed consumer spending power, is expected to curb house price growth during 2017.” Martin Ellis, Halifax housing economist said.

His words are confirmed by the numbers showing downfall on the property market in some of the most expensive London’s regions such as Chelsea, Kensington, Fulhamm, City of Westminster and Hammersmith where the prices have decreased by from 0,3% to 3,3%. The main reason for this is the new higher tax changes brought by George Osborne, the former chancellor, especially on houses worth more than £1 million.

Most of the experts prefer to stay moderate in their predictions and despite the keep coming post-Brexit doom scenarios of ice age on the property market. According to Nationwide Building Society a rise of 2% over the year is “more likely than decline”. Currently an average house in UK costs £219,949.

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The foreign Influence

Taxes, previous year tendencies are measurable influence on the market, think most of the experts but they think another figure can influence the market – the foreign buyers. One of the possible post-Brexit scenarios talks about increase of interest of home buyers from Asia. Since more and more Chinese investors are opening businesses in UK that will bring expansion property market too. And despite the attractive side of pouring new capitals in the country’s economy an interesting question raised  – how much of the houses will be affordable for the local people if the demand on the market is always very high? In some places like Australia and British Columbia in Canada since last year there are additional charges for overseas buyers. Hong Kong and Singapore have “penalty” for foreigners purchasing homes for several years already. In Switzerland, the law is even more strict – non-European residents aren’t allowed to buy a house at all. In the UK, this question is still debatable but the new stamp duty system is expected to add extra price for buyers of second or additional houses.