2018 UK Property Market Forecast

We look forward at what to expect, in our 2018 UK property Market Forecast. 2017 has been an interesting ride for property investors, average property prices have continued to grow, with prices expected to rise in the North of England. International property investors have continued to show confidence in the UK property market and activity continues from overseas while the pound has remained low comparative to pre-Brexit prices. This year we have also seen the rise of the Bitcoin and cryptocurrencies, and the first property in the UK has been bought with Bitcoin in December. Property prices have risen by 2.5% over the past year, the Nationwide building society reports, therefore, in line with the projections made for the year.

Looking Back at 2017’s Projections

This time last year, we posted the comments made by the analysts for what they expected 2017’s would have in store; Ed Stansfield, Capital Economics: 2% rise Simon Rubinsohn, Rics: 3% rise Robert Gardner, Nationwide building society: 2% rise Martin Ellis, Halifax: 1% to 4% rise These projections were regarded as some consultancies as bullish. However, they turned out to be quite accurate. In the hope that the experts are correct again, what can be expected for property investors in 2018? There is alot of worry regarding the Britains economic growth and Brexit drama creating uncertainty for the wider economy. However, despite this, predictions for the housing market in 2018, are more postive! Property prices predicted to rise, however, only by a small margin. The agents are being conservative with their estimates; Countrywide estimates a rise across the board of 2% in 2018, Savills & JLL both predict a rise of 1%. However, firms outside of this are more bullish in their price growth expectations for 2018. Consultancy firm PwC predicts annual property prices will rice on average 4% until 2025. Furthermore, the independent Office for Budget Responsibility has said it expects a rise of 3.1% in 2018. On the other end of the scale, Morgan Stanley forecasts a fall of 1.6% in property prices ion 2018.

Longer Term Outlook For the UK Property Market

Looking further ahead, Savills are anticipating a 14% cumulative rise in prices across the UK by the end of 2022, with the northwest of England seeing the biggest regional price rise of 18.1%. JLL predicts 13.1% House Price Growth on Average and 20% for Manchester Liverpool Leeds over the next 4 years. Hometrack report that, affordibility in the capital is now a record high of, 14.5 times the average income. The more expensive properties in central London are those which are more likely to see a price drop. Strutt & Parker estate agency gives two scenarios: A outcome is that, prices are static, but at worst they could plummet by 5%. What’s more, is many believe that prices in prime central London could stagnate for several years. In contrast to Central London, Consultancy firm PwC forecasts gains of 3.8% across Greater London within the M25, in 2018. Hometrack says that in Glasgow, Liverpool and Newcastle, the current house-price-to-earnings ratio is lower than the 15-year average, which makes them good value ahead of likely increases in the longer term.

London’s property market

London’s property market, according to Rightmove is in for another rough ride in 2018. They estimate that residential property prices London are likely to drop a further 2 per cent in 2018. What’s more is the London market fell 1.8 per cent in 2017. In the month of December, prices fell 3.7 per cent in London, and 2.6 per cent across Britain. However, this is a seasonal slump which is typical for December. Nationally, prices will continue to be supported by the perpetual shortage of property for sale.

Overall Outlook

Overall, the outlook for the UK property market is mixed. There is undoubtably a shortage of avauilable homes, which will continue to support property prices from drastic price drops. However, there looks to be grwoing regional disparity, with growth being witnessed in the north of England in particular. Therefore, 2018 will likely see a continued push towards rising prices in many areas of UK, with investors looking to the north for considerable gains and higher yields. Read More: UK House Prices Continue to Rise in 2018

Student Accommodation Investment

As student accommodation continues to become a mainstream asset class, the trend of international buyers investing in student accommodation is set to continue in 2017. A combination of a weak pound post Brexit and yields which outsrip residential property, the higher occupancy offered by student accommodation, investment in student property increased substantially during 2017. Analysis from Savills estimates that total investment in student property will reach £5.3bn by the end of 2017. Therefore a 17% increase from 2016. The demand for student accommodation has outgrown supply of available stock. Of the £4.5bn traded by Savills last year, £1.1bn (25%) involved forward funding developments while £223m (5%) were development sites. Existing stock made up 69% of purchases, representing the lowest percentage recorded.

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