The first month of 2017 saw UK house prices take a hit for the first time since August 2016. On top of that, experts suggest that annual growth has slowed significantly – especially since the EU referendum. The good news? Long-term predictions continue to forecast increases for the next 50 years, boosted by a shortage of houses on the market.
We reported in our 2016 end-of-year update that buyer activity was slowing, reflecting uncertainty over Brexit and the impact it will have on the market. This seems to have come to a head in January when, as Halifax data suggests, house prices fell by 0.9%.
Stats from rival mortgage lender Nationwide also found that annual price inflation hit its lowest ebb since November 2015, with house prices increasing by just 0.2% in January. In looking at prices right across the country, the cost of the average UK home was £205,240.
The Guardian reports that Nationwide chief economist Robert Gardner expects the housing market to continue to soften in 2017. Many experts predicted that this would be the case, thanks to weaker jobs and wage growth pressuring household budgets.
Much attention has also been paid to warnings from former Bank of England monetary policy committee member Professor David Miles, who believes that UK house prices will continue to ‘soar’ over the next 50 years.
In particular, he flagged that people needed 4.5 times their salary in the late 1970s to buy a home, whereas today they require 7.3 times the amount. Professor Miles claims that this will continue, making home ownership unavailable to even more people. This would mean continued price rises, albeit at a slower pace.
Professor Miles suggests two key factors that could affect this trend: land availability and 'building up'. Communities Secretary Sajid Javid is reportedly ready to address these matters in his new housing policy.
According to City A.M., Javid intends to liberalise the planning system. That means making the process of building new houses much easier, as well as removing restrictions on the height of new homes and even opening up parts of the green belt to development.
If these policies pass, we could see welcome tweaks in 2017 to some of these long-term predictions.