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At the end of 2017, you couldn’t move for people and specialists making predictions. This is the same at the end of every year but for the property market, it appears the experts were predicting a gloomy and challenging year ahead. With aspects like Brexit and a lack of confidence being cited by many professionals, most specialists were saying that property prices were set to fall in 2018.

Therefore, the announcement from Nationwide for January 2018 took many people by surprise. In fact, the Chief Economist from the Nationwide stated that the organisation was shocked at the increase in house prices. This wasn’t just a standard increase, this was the largest rise in house prices for 10 months. For January of 2018, the average price of property was listed as £211,756.

This was an increase of 0.6% from the December of 2017 figures but when looking at the year-on-year figures, there was an increase of 3.2%. With this increase flying in the face of most predictions, some people may think that it is kay to start looking at the rest of 2018 in a more optimistic light. It is probably too early for that, and many specialists still suggest that the market will slow or decline, but there is a need to understand why property prices rose when they were predicted to fall.

A lack of suitable housing impacts on the property market

One of the key factors, if not the most prominent factor, in the property market over the last ten years or so is the lack of suitable housing. There is a need for affordable housing in the UK and when this isn’t present, simple economics, with demand outstripping supply, leads to an increase in property prices.

It is believed that January saw a fall in the amount of properties being placed on to the market. In a way, you wouldn’t blame homeowners for not placing their home on the market in January. After all, most predictions suggested that property prices were going to fall, which means that some homeowners will have decided to wait to later rather than placing property on the market at the start of the year. Ironically, the homeowners who ignored the predictions and placed their property for sale in January would have benefitted from increased prices.

Predictions can impact behaviour in property market

There is no doubt that property predictions impact on the market by changing certain people’s behaviour. This means that the positivity in the January market may lead to more homeowners looking to sell their home, which could see prices falling.

It is difficult to predict what is going to happen with the property market. So many factors influence the market and there are always new elements to consider. After all, the removal of stamp duty for first-time buyers purchasing property at less than £300,000 probably hasn’t fully impacted the market yet, so this could be another issue that is worth paying attention to.

If you are looking to make a move in or around Dunstable in 2018, contact Deakin-White and we will do what we can to help you take the next step.

There is no denying that the announcement that stamp duty was being removed for first-time buyers purchasing a home for less than £300,000 captured the imagination and media headlights. This was the big news story from the Autumn Budget in November 2017 and the move was heralded as a sign that the Government was keen to assist first-time buyers step on to the property ladder.

Of course, not long after the announcement, there was opposition from the Office for Budget Responsibility. The response suggested that the removal of stamp duty would lead to house price increases, negating the savings that first-time buyers would enjoy. There was an argument put forward that this move would be of more benefit to existing property owners than people looking to step on to the property ladder.

Savings can be put towards a deposit

While both viewpoints are valid, there is an argument that anything which lowers the up-front cost of buying property to be of benefit. The money saved from not having to pay for stamp duty could be put towards the deposit and increasing the size of deposit is always of benefit when looking to buy property.

Of course, not all first-time buyers will benefit from this move:

·        Buyers purchasing property at less than £125,000 wouldn’t have paid any stamp duty

·        Buyers purchasing property over £300,000 but less than £500,000 only receive some discount

·        Buyers purchasing property over £500,000 receive no stamp duty discount at all

With the average price of one-bedroom properties in Dunstable listed as £153,588 and two-bedroom properties listed as £209,924, many first-time buyers in the area should be able to benefit. This wouldn’t be the case for most buyers in London or in some parts of the South East of England where the price of property is much higher.

Some firms have expressed an increase in interest from first-time buyers

The fact that this discount is likely to be applicable to most first-time buyers in Dunstable should be of benefit to the market. At the end of 2017, an agent in London, said they experienced a 10% increase in walk-ins from first-time buyers expressing an interest in property. Given that most first-time buyers in London aren’t even eligible for the stamp duty cut, it suggests that people are interested to see how or if this change impacts on them.

This is likely to be the same story in Dunstable. It may not convince many people who had no interest in buying a home to suddenly look for property but for prospective buyers who were wavering over buying property, this may provide them with added motivation to do so.

There is still industry doubt that the cut will help people buy homes. The Royal Institute of Chartered Surveyors, or Rics, polled their members at the end of 2017 and 66% of respondents said they didn’t expect there would be any impact from this change. 12% of respondents said that they did believe the cut would assist first-time buyers though, and it remains to be seen what the true impact on the market will be.

At Deakin-White, we hold an interest in the UK property market, and its movements, but our focus is on Dunstable and surrounding areas. If you want to be fully informed of how the local market reacts to the stamp duty cut, stay in touch with us and we will make sure you know what is happening.