Residential Property Focus
2016 Q4

Residential Property Focus
When it comes to the crunch

3 November 2016, by Lucian Cook

Forecasting in the aftermath of the Brexit vote is difficult, but its impact on the property market is considerably less than that of the credit crunch

By the time we publish this document 3,375 days will have passed since the onset of the credit crunch. That event has had by far the single biggest impact on the UK housing market in my adult life.

It is the source of the ultra low interest rate environment off which the London housing market has fed (in a way other markets have not). It carries responsibility for the much lower transaction environment, in which people now trade up the housing ladder less often. It was the catalyst for the mortgage regulation that has entrenched the divide between the haves and have nots.

 

By contrast, when we release the housing market forecasts contained in this report, 134 days will have passed since the EU referendum decision. The Brexit vote makes forecasting more perilous than usual. It also has the capacity to shape the market over the next five years. But in terms of its impact, it’s not comparable to the events of the late summer of 2007.

Economic forecasts have been cut back. This means less impetus for house price growth. Buyer sentiment across all sectors of the market is likely to be fragile during the period of negotiations to leave the EU. Yet interest rates are expected to stay lower for longer, preserving affordability for those with a mortgage. This reduces the risk of a housing market correction, even in the highly priced markets of the capital.

Politically, the vote to leave the EU has spawned a new prime minister and a minister for housing. This has heralded a new approach to housing policy, one that is less wedded to relentlessly promoting home ownership, by giving renewed focus to driving up new housing delivery across a range of tenures.

Looking forward, politics will influence the market in other ways. Increasingly, taxation is being used as a housing policy tool, whether that be the reduction of tax reliefs for buy-to-let landlords, a stamp duty surcharge for investment properties and second homes or the high rates of stamp duty applied at the top of the market.

In the following articles we have explained in more detail how all of these factors have affected our outlook for the housing market over the next 1,883 days to the end of the year 2021.

Articles from Residential Property Focus 2016 Q4

The market's change of gear

03 November 2016

The market

Economic uncertainty post Brexit will put a brake on house price growth, despite lower interest rates

Slow on the uptake

03 November 2016

Slow on the uptake

Transaction levels are set to fall back in the period to 2018 with a recovery to follow. What exactly does this mean for different buyer types across the UK?

Market predictions

03 November 2016

Market predictions

Five-year house price forecasts for the prime and mainstream markets, 2017–2021

Prime

Taxation and caution during the EU negotiations will hold back the market until 2019

Support for more new homes

03 November 2016

Support for more new homes

Government measures are announced to help boost the number of new homes

Rent ascent

03 November 2016

Rent ascent

Our new and improved forecasts show the rental growth outlook at a city level

What next for residential property?

Uncertainty over the economy as the Government negotiates its exit from the EU means a period of adjustment across all of the housing markets in the UK

 
 

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Lucian Cook

Lucian Cook

Director
Residential Research

Savills Margaret Street

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Susan Emmett

Susan Emmett

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Residential Research

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Yolande Barnes

Yolande Barnes

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World Research

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Residential Research

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Chris Buckle

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Residential Research

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Faisal Choudhry

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Residential Research

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Lawrence Bowles

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Residential Research

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Residential Research

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