- Thu 25 Jan 2018
To understand what happened in the market in 2017 is key to understand what will happen to the market in 2018 and what we all want to know in particular is what will happen in the South West. Firstly in this article at the same time last year I forecast increasing prices due to a shortage of instructions coming to the market. In fact I predicted a 4% increase in the Average SW price t o reach just over £230,000. The reality of the year now it is over, was there were 5% less properties that came to the market and because of that shortage, the average price of a SW House increased by 6.7% to £237,000.
This was totally predictable and whilst many pundits were forecasting doom and uncertainty about the effects of Brexit and Trump, the market is driven by supply and demand and always will be. Supply was short due to political uncertainty but the buyers still wanted to buy because Mortgages were cheap and the SW is still one of the most desirable places in the country to live. After all, where else are there so many beauty spots to enjoy, coastal and moorland walks on our doorstep and a safe environment in which to live. Combine this with superfast broadband and people’s ability to work from home and this still makes for a busy market driven by many different types of buyer all drawn to the SW by different attractions.
So will 2018 be just the same? Well the doom and gloom pundits have already pointed out the possible Brexit pitfalls again and Trump could still do anything but there are many other much more subtle things that have happened in 2017 to effect 2018 and will make a difference as opposed to something unknown that may or may not happen!
Firstly Philip Hammond has had a real go at the property market with stamp duty. His 3% Levy on second homes has hit hard in the SW and has been responsible for a decline in those type of sales, at least at the higher end of the spectrum. But that is nothing compared to the damage a local council can do by trying to restrict the sale of property for second homes. Secondly, Philip Hammond again, has made some very positive moves with the pledge to provide 300,000 new homes to ease the supply and demand issue that is driving prices ever higher and with some very welcome relief from Stamp Duty for first time buyers which will very much ease the way for younger buyers to get on the ladder at last. The government have introduced much legislation to try to restrict the private rental market and release more private rental stock back onto the sales market. This won’t work in its current form as the return being delivered by property both with capital increase and percentage return on investment far exceeds anything that can be obtained by money in the bank.
On balance the government intervention in the property market is on the positive side and they must be applauded for recognising the issues with supply and demand and for their help for the first time buyer not only with a break from the stamp duty but also with the Help to Buy schemes that are available and this will assist to create a feel good feeling about the market in 2018. My prediction for the year ahead is positive. There is still a short fall of property available to buy and the area we all live and operate in is still one of the most desirable in the country.
Interest rates are still low and will remain low, so better to invest in property than leave money in the bank. Mortgages are still cheap and great deals are available as lenders fight to win the business. Prime London has seen a 3% fall in 2017 and the average increase across the whole country has been recorded at 2% so the SW at 6.7% was one of the highest increases and made the SW a national hotspot. For 2018 I believe we will experience more of the same with the SW outperforming the rest of the country and I believe another 5% increase is on the cards for 2018. If correct then the average price of a SW home will be £249,000 by this time next year. With prices driving this way it makes sense to buy sooner rather than later as nothing is going to change in the foreseeable future and the SW remains the best place to invest in property in the country.
Bradleys Managing Director