2018 to be “challenging” for housing market says forecasting group
This year is going to be “challenging” for the housing market according to the influential Ernst & Young ITEM Club, a forecasting group.
It says that what seems like good news early in the year – Nationwide’s surprisingly buoyant housing market report for January, for example – has to be set against a background of poorer figures elsewhere.
“Latest data from the Bank of England shows that mortgage approvals for house purchases weakened in December to be at a near three-year low. Specifically, mortgage approvals dropped to 61,039 in December (the lowest level since January 2015) from 64,712 in November. This was also the fourth decline in five months from 69,425 in July” says Howard Archer, chief economic advisor to the EY ITEM Club.
The Club predicts that average UK house prices will this year rise two per cent.
“The fundamentals for house buyers are likely to remain challenging. The squeeze on consumers’ purchasing power remained significant going into 2018, and it is likely to only gradually ease as the year progresses. Additionally, housing market activity is likely to be hampered by fragile consumer confidence and limited willingness to engage in major transactions” explains Archer.
However, he accepts that the shortage of homes for sale may help keep prices buoyant as demand may outstrip supply.
“The abolition of stamp duty for first time buyers for properties costing up to £300,000 (and on the first £300,000 for properties costing up to £500,000) should also provide some support to house prices” he says.
But Archer warns that on the biggest issue of all – attempts to boost house building – the long-term required for this is unlikely to influence house prices in the near future.
Kindly shared by EstateAgentTODAY