Will 2016 see house prices reach a plateau?
PUBLISHED: 09:00 14 March 2016
Â© Haakon Dewing
Jamie Minors of Minors & Brady gives his view as we head into spring
Since the housing crash in 2007-8, property prices across the country have almost continuously risen month on month with property experts wondering: “When is the next crash?” For me, there are three key areas to look at for the short term: consumer confidence, supply and demand, and the changes in Stamp Duty.
Every day I’m challenged by friends, family and the public in Norfolk as to when I think everything will go pop, but as things stand I’m delighted with how the market is looking. According to the Halifax, prices have increased 9.7pc year on year, with bricks and mortar proving to be a sound investment for the past few years.
But why? There is confidence. One of the main driving factors (except the obvious one of supply and demand) to a healthy property market is consumer confidence. Are Mr and Mrs Smith ready to move from their three bedroom semi-detached house into their “forever home” - the four bedroom detached with a double garage and larger garden for entertaining and the children’s trampoline? The answer is yes, they are.
We’ve now been open for just over 12 months through the transition from Minors & Co to Minors & Brady (with Alex Brady joining us from branch manager at one of Europe’s largest independent agents). In the past 12 months we’ve listed more than £42.3 million worth of property from our Wroxham office, ranging from £80,000-£650,000.
Supply and demand is the main economic driving factor which dictates pricing. The more demand, the higher prices rise due to people fighting over properties and paying more. A decrease in supply will add to this unbalance.
So, we’re seeing all of these new build estates going up around us, but is it enough? No. Supply is constrained by developers who cannot access the required funding, or cannot find a suitably skilled workforce to keep up with the demand. We’re a growing population and we have a desire to own our own home in the UK, something I completely agree with. But with wages not increasing enough to match the increase in property prices, will this result in demand easing off for home buying? I think so.
The last factor affecting a short term change in activity is the change in Stamp Duty on April 1, 2016. The change will result in an extra 3pc surcharge, and for an investor purchasing a buy-to-let property for £275,000, the Stamp Duty goes up from £3,750 to £12,000. The changes also apply to property being purchased as a second home. We’ve seen a huge spike in enquiries from buy-to-let landlords who want to add to their portfolio or buy their first investment property, desperate to get the deal through before the change in Stamp Duty, with some investors offering over the asking price. After this period, we expect prices to still rise, but I’m certain they will calm down due to less demand and competition, leaving us with a healthy but stable property market. w
Contact Jamie Minors at Minors & Brady on 01603 783088.