Asking prices in the UK set to rise by just 1% in 2018, latest forecast suggests
Different speeds for different markets are set to continue in 2018 in the UK with overall asking prices set to rise by just 1%, according to the latest property market analysis.
Shortages of suitable properties for sale in some sectors and locations will result in upwards price pressure in new seller asking prices in some areas, says the report from property portal Rightmove. But in others new sellers will have to trim their initial price aspirations in less buoyant parts of the market.
The Rightmove report reveals that the end of year seasonal slowdown has resulted in annual asking prices rising 1.2%, a fall of 2.6% or £8,178 and its prediction of 1% growth next year would be the lowest yearly increase since the 0.8% rise recorded in 2011.
The report points out that average fall at this typically quieter time of year has been 2.1% over the last seven years and this slightly greater dip is in fact the largest monthly fall for five years. It is symptomatic of the more challenging market some sellers find themselves in and it is also a factor in Rightmove’s slightly more cautious prediction for 2018 compared to this year.
The best price growth is likely to be in the lower and middle sectors of the market with Rightmove forecasting average growth of 3% for first time buyers, typical properties with two bedrooms or fewer, and 2% for second stepper properties, properties with three or four bedrooms.
It also says that prices for top of the ladder properties, predominantly influenced by ongoing re-adjustment in London and its commuter-belt, are predicted to fall by an average of 2%.
Miles Shipside, Rightmove director and housing market analyst, said:
‘Home owners have had a good run, with every year since 2011 seeing a rise in the price of property coming to market, and the national average rise over those six years being 30.9%, equivalent to 4.6% per year.’
He believes that 2018 will continue the 2017 trend by being a real mixed bag of different price pressures both up and down, but the net result is likely to be another year of a slowing in the pace of price rises.
‘The peak in the cycle of rising prices was 2015’s annual jump of 7.4%. The following year saw price growth more than halve to 3.4%, while 2017 is finishing up at 1.2%. Increasingly stretched buyer affordability, exacerbated as intended by tighter lending criteria and increased stamp duty for second home owners, is taking its toll on upwards price pressure.
‘It is aided by a slowdown in the higher end markets, with the influence of a re-adjusting London being a weighty factor on the national averages. The overall price growth slowdown that we are predicting for 2018 masks a somewhat tangled web of differing supply and demand factors, some favouring price increases and some in favour of price falls.’
According to the analysis the factors in favour of prices increasing include overall housing supply being low, not enough homes being built, cheap mortgage options, and the abolition of stamp duty for first time buyers.
But there are also factors that will contribute to prices falling such as stretched affordability failing to be addressed by muted wage growth, a continuing reluctance of discretionary and typically higher end movers during periods of uncertainty, with re-adjusting London influence being a weighty factor.
Shipside pointed out:
‘The mass market remains robust, with around 85% of transactions involving first time buyer and second stepper properties. Many sellers in the upper end of the market will struggle unless they price more aggressively to tempt wealthier but more hesitant buyers. While the minority 15% of the market volume is the upper end with at least four bedrooms, it wields disproportionate influence on national averages as the higher prices mean that every percentage point drop has a greater effect.’
Kindly shared by Property Wire