UK housing prices set to rise in 2017

Due to a lack of existing homes and development properties in the supply pipeline, experts predict a rise of 2-3% in housing prices over the course of 2017, despite Brexit-induced fears of the housing market slowing down further.

The overall opinion seems to be that the shortage of housing, especially low-cost housing, will continue to keep sales prices and rents rising steadily throughout 2017, though not as sharply as they rose in 2016.

The International Business Times suggests that once Brexit is triggered, there can be no return to the rapid price increases of just a few years ago. Despite a partial recovery, Housebuilders’ share prices are still more than 15% below pre-Brexit vote levels, and unlikely to recover further in the near future.

Other research suggests that even if housing prices do not begin to fall throughout the UK, the market could well slow dramatically, with many sellers not able to find buyers until after the pending Brexit situation finds some sort of resolution. New buyer inquiries were very low in the last half of 2016, and this could presage substantial reluctance to buy, regardless of price, in 2017 and beyond.

This comes amid warnings from OECD (Office for Economic Co-operation and Development) that housing prices in ‘advanced economies’ worldwide have risen to dangerous levels, and another global housing market collapse could be immanent. Canada and Sweden in particular were cited as examples of countries where property prices were rising too quickly to be considered stable.

Why that might not be all bad

What that means for the UK market is that Brexit’s tempering of the housing market could be a good thing, keeping the market from collapsing on a national level, no matter what might happen internationally. Especially so if, as OECD says, overseas investors will bear the bulk of the market adjustment, suffering lower-than-expected but still supportable returns on their investments. Furthermore residential rents are expected to stay high despite any slowing of the market.

It also seems like the government’s attempts to influence the market with help-to-buy schemes and fast-tracked affordable housing are acting to stabilise the market for housebuilders generally, contributing to either a steady recovery or a cushioned decline in the market, depending on which predictions you follow.

Overall, things could certainly be worse.