What can you expect from the housing market this year?
17 January 2019
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We’ve just published our biannual report into the housing market, which offers a retrospective look over the past 6 months – and what to expect in 2019.
With Brexit on the horizon, you may be wondering if it’s a good time to be making a move? Although Brexit has provided its own set of challenges for the housing market, there are positives to bear in mind too. Employment is at its highest rate in years and subsequently, there are even more attractive mortgage deals on offer to buyers.
So where exactly are we?
Residential buying and selling
While Brexit has caused uncertainty, there’s also a strong element of the market catching its breath after years of climbing property prices.
- Property prices in the South East were down by 0.4% in October (Office of National Statistics).
- Part of this slowdown was to do with the reduction in investor buyers.
- Our own sales values dropped by 1.6% in the second half of last year but year-on-year showed an actual increase of 2.17% – a figure that would be hard to beat with most other forms of investment. (Arun Property sales figures Dec 2018.)
Looking ahead to 2019: As soon as our Brexit deal is confirmed, buyers should come back in greater numbers, tipping the balance of supply and demand back in the favour of sellers, and boosting the long-term trend toward rising prices.
We predict a 1.5% increase in property prices in 2019, in line with the steady market we expect to see. Prices will continue to increase until 2021 when the expected increase to interest rates will make it more expensive to obtain a mortgage.
Looking forwards it will became even easier for tenants to switch between properties, largely thanks to Nil-Deposit Schemes.
With Nil Deposit, tenants no longer need to save up for a deposit before they can move home. Instead, they’ll pay a small service charge which covers up to six weeks’ rent for any breach of the tenancy agreement.
This, along with the ban of letting agents’ tenant administrative fees, means the initial costs of renting are dramatically reduced. This could mean that in 2019 tenants are more likely to move if they feel that their property is not up to scratch. As a landlord, you’ll then run the risk of experiencing periods of no rental income while you’re between tenants… so how should you safeguard your property against this?
Our advice to landlords going into 2019 would be to keep your tenants happy. Make your rental property as attractive as possible and ensure it is let on a fixed-term contract in order to provide stability. For more advice about how to keep your property tenanted, get in touch with our lettings team.
Land & New Homes
Up to now, there’s been much-publicised concern over the shortage of new building going on around the country. For us, however, we’ve had a different experience:
- Our total new-build stock currently available has increased from last year by 28%
- Houses have shown the greatest increase at 48%
- Apartment numbers have increased by 8%.
As well as this, the average number of reservations have also increased, with a remarkable year-on-year rise of 182% in Essex (Arun Property sales figures Dec 2018.).
Looking ahead to 2019: Help to Buy is expected to shape how new homes are sold in the foreseeable future. Deceptively simple in principle, Help to Buy does have its share of complexities, making it even more vital for you to seek specialist advice from an expert like Pitts if you’re looking to buy a new home in 2019.
One welcome development in 2018 was the return of the first-time buyer. The numbers have been boosted and helped by the Stamp Duty exemption – which is estimated to have saved them over £400 million since it was announced in November 2017 (HMRC Stamp Duty outcome, 2018.).
Another noticeable change is the take-up of 5-year fixed-rate mortgages (as opposed to the traditional 2-year deals). It suggests that buyers are looking for a little more certainty, and are prepared to pay for it.
Looking ahead to 2019: With interest rates still at historic lows, mortgage deals are becoming increasingly competitive. Lenders are now offering existing customers deals which are similar to those available to new customers, leading to a highly competitive remortgage sector.
In fact, for the year ahead, you should review your current mortgage with a broker such as Mortgage Matters Direct who will be able to advise you on whether a better, cheaper or more appropriate deal is available.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Want to learn more about the current state of the housing market? You can download the full report using the form below.