The referendum on Europe represents the greatest uncertainly for 2016 and 2017, with the outcome having a huge impact on all markets, particularly the housing market. So you’ve guessed what phrase is on the tip of investors tongues…Brexit. The prime minister has vowed to reshape Britain’s ties with Europe, before putting EU membership to a vote by 2017.
Eurosceptics argue that withdrawal would reverse immigration, save the taxpayer billions and free Britain from an economic burden. Europhiles counter that it would lead to deep economic uncertainty and cost thousands, possibly even millions, of jobs.
So what are the predictions for the residential market over the next 24 months?
Regionally, London has continued to see the strongest levels of house price growth, although that market is increasingly restricted to more affluent buyer groups who are having to spread their search further across the capital and into the ‘doughnut’ areas. As a result, there has been a shift in the pattern of growth in the capital towards the less expensive boroughs, such as Peckham, Woolwich and Croydon.
The top end of the London market has been slowed down by the stamp duty changes introduced in the 2014 Autumn Statement which has seen transaction costs increase even further. Given the current situation, forecasts predict that this higher quartile of the market is set to experience little growth .
Cost of Borrowing
The outlook of the mainstream market relies largely on the cost of borrowing, with suggestions that current rates may follow in American footsteps and experience an increase. These rate rises would cause a problem in terms of affordability, making house price growth dependent on earnings and the pace of economic growth.
The fact remains that houses are becoming more expensive, demand is increasing and supply isn’t keeping up. Therefore, despite a recent hit to the buy-to-let sector via stamp duty alterations, the private rental sector is expected to see an increase in demand. The stamp duty changes will actually prevent many investors from expanding their portfolio, restricting the new supply on the market, and therefore increasing the price of rental accommodation.
To find out more about buy-to-let opportunities with Inspired Homes, please contact our team on 020 8688 6552.