The EU referendum outcome and the stamp duty remarkably influenced the housing sector in 2016. The stamp duty reforms introduced 24 months ago have already begun to have an effect on the housing market where upfront expenses of purchasing a home have increased significantly. Another trend, a higher rate of stamp duty on a second property has also been introduced. From early 2016, the Brexit poll created uncertainty in the housing market, and the surprising outcome continues to escalate the feeling in 2017. However, it is crucial to understand how the sector behaved last year so as to make accurate projections for 2017.
The Eastern and South-Eastern side of England propelled growth last year. In 2017, observers suggest that some sections of the north of the country will witness lower decline or higher growth rates. Rics, a research firm, predicts that the British average will be slightly lower in East Anglia but that other regions that are expected to outperform this area including the West Midlands and the North-West. London, the part mostly affected by the export sector and financial services market, is likely to experience the impacts of Brexit poll.
By the end of September 2016, the number of new houses constructed in Britain rose to 147,880, which is a 4% increase. Between 2015 and 2016, only about 190,000 new homes were recorded in the England housing stock. The net addition accounted for the demolitions and conversions. This remains the highest figure since the monetary crisis. The House of Lords recommends 300,000 new-builds annually in England. However, the uncertainties in the market might adversely affect the housing market.
The Rental Sector
Some portions of the nation continue to witness an increase of properties into the industry, and the balance has favoured the tenants. National statistics indicate that London rents are declining. In November 2016, the average rent stood at 0.7% lower than the previous year, the highest fall in the last six years. In 2017, the rents are expected to record a 2.5% rise in the country. However, the increase might hit 3% in London.
Purchasing to Let
The stamp duty change in April affected the buy-to-let sector. The sales skyrocketed just before the introduction of the high rate. In March 2016, over 162,000 homes changed hands, a dramatic 77% increase from 2015. More shifts face landlords this year regarding strict affordability checks for purchase-to-let properties at the time of removing tax relief on the mortgage interest.
The entire year recorded slower rate for the top-end housing market. Sales of properties over £1million have been ruined by the reforms in stamp duty toward the end of 2014. The Brexit referendum also increased uncertainty in the housing market. Since then, property brokers have recorded interest from foreign buyers focusing on the weakened pound sterling. A section of developers has also reported declining sales. Expensive developments have also reported price cuts.
The House Costs
The latest ONS’ house price index for Oct 2016 indicates that across the country, prices increased by 6.9 percent, the lowest number since the end of the previous year. The mean cost was £217,000. Since the beginning of the year, statistics show that growth continuously declined. Since Brexit poll, the numbers of buyers has increased, but the number of houses coming into the market has dropped. In 2017, Rics forecasts a 3 percent fall.
The number of home buyers is expected to increase this year, but the number of new homes will remain low. The industry players must focus on building new and affordable homes. The government also needs to fund developers to build more properties.
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