It has been as difficult as ever to predict what UK house prices will do in times of such turbulent global uncertainty – caused by the Brexit vote and Donald Trump amongst other political tensions. In spite of past gloomy predictions, house prices have remained resilient up to now. The average price for the UK was £162,000 in 2012 according to Land Registry – now it is £305,732. But when will house prices go up?
House price rises have made it hard for first time buyers to get onto the property market in the past 12 months. It has also made it harder for ‘second steppers’ to buy a larger family home after outgrowing their first home – typically trying desperately to move up from on the bottom run of the property ladder. However, after a period of rising house prices we are currently experiencing a sluggish market with some areas seeing house price falls.
Why did house prices rise?
- Prices have been rising above inflation due to lack of supply:
- The number of households in the UK is rising, but not enough new homes are being built to keep up with demand
- Changes to pensions and low interest rates have made it easier for the older generation to buy properties as an investment to rent out
- Buyers from abroad have been buying up UK property to invest
What is happening now?
Spring is traditionally the busiest time of year for the housing market with high demand leading to the highest house prices of the year and houses selling for asking price or more. However, Halifax reported that house prices fell by 3.1% in April – the most substantial drop in nearly 8 years. Capital Economics predicts that the house market will actually slow down for a few years forecasting that London and the rest of the south east’s house prices could continue to fall by up to 5% in 2019.
Despite the fact prices increased, a house price crash is unlikely. Unemployment is at its lowest level for more than 40 years and interest rates are also low without any sign of rate rises. It is likely that the market will just slow down and stagnate for a while, particularly in the north west. This has its positives, as any estate agent would tell you – it’s a buyers market – your money will go further. If you are looking to upgrade your home, or to buy your first property, now is the time. Sellers will just have to make extra effort during this quiet period to make sure they make their property stands out and is as attractive as possible to gain a higher price.
Why do house prices slow down or fall?
There are a number of reasons for a market slowdown:
- Changes to government policy, for example deliberate changes to make the buy-to-let sector less tempting to investors
- The increase in stamp duty for second time buyers and decrease of tax relief for buy-to-let to reduce competition for first time buyers
- Lack of consumer confidence. Current affairs leading to market nerves created by economic uncertainty. Homeowners choosing not to sell in unpredictable times, delaying making big spending decisions.
When will house prices go up?
While the experts have differing opinions on when will house prices go up, many are agreeing that house prices will be slow to increase. However, there is still a shortage of housing in general, so prices can’t decrease too far with lack of housing to supply demand. The lack of homes being built across the country could put pressure on prices to rise further in the future. Not only this, but interest rates are predicted to remain low for the foreseeable future and this encourages higher house prices. The weakness of the pound will also potentially encourage investment in property abroad, which also supports UK house prices.
The time of year continues to influence houses prices as well. Winter traditionally sees a market slowdown with offers more likely to be accepted. Viewing properties in better weather mean that more potential house buyers will be on the hunt, increasing prices and transactions.
Is now a good time to buy?
First time buyers can take advantage of this current market. Their money will go further with lower advertised prices, and if a property has been up for sale for a long time, the owner will more be more likely to accept an offer. However, for many people waiting for the optimum time to buy or sell is not an option. Moving house if often dictated by circumstance, such a growing family or job relocation.
If you have flexibility, it is worth doing some research and listening to what the economists are saying before you buy. Certainly the current marketing cooling down will advantage many looking to buy for the first time or upgrade. If you are looking to downsize, it might be worth waiting until the market picks up again.
Is now a good time to sell?
The biggest part of the market that wants to know when will house prices go up, is the selling market. No one wants to sell their home only to find a property boom is just around the corner. But how likely is it? The answer of course, is a difficult one. Asking what will happen to house prices often overlooks the types of property in the UK. Once you start to separate property types the picture starts to become much more clear.So when will house prices go up?
The problem with our current property market is that everyone is waiting for house prices to bounce back. Leading to a stagnant market. But when you start to look at house prices for larger detached houses, these prices have already seen a massive boost since recession figures. The types of houses that have been struggling to raise their value are flats, terraces and smaller semi detached. This happens to be the exact corner of the market commonly purchased as buy-to-lets. With the tax changes coming for landlords, and the fact their property values are still rock bottom, its no wonder that people are reluctant to sell.
One thing you can be sure of, is that no matter what property you’re thinking about selling, UK PCB can help you out. We have a large network of accredited property experts who will give you a free, no obligation offer on your house. They also have a variety of services available, so it’s always worth contacting to see how much easier your house selling process could be.