Forecast key points
- Overall sales volumes to reduce slightly over 2018
- National house price growth set to come to a halt but lack of supply likely to prevent outright declines
- Stamp duty changes to have minimal impact on activity
- Rents to rise by a modest 1%
Regional variation
House price growth in the UK will likely come to a halt over the course of next year as the number of transactions reduces slightly, according to the RICS housing forecast for 2018. However, it should be noted that the national prediction includes price growth in some regions offsetting declines in London and the South East.
Overall levels of activity across the residential sector have been a little underwhelming throughout 2017, with the latter part of the year in particular proving something of a disappointment. The RICS UK Market Survey has recently shown buyer enquires stalling, sales volumes stagnating and sentiment turning altogether more cautious as a result.
Stock shortages
The likely theme impacting the behaviour of the housing market over the course of 2018 is again expected to be demand pressures resulting from stock supply on estate agents books close to all time lows. As such, there are no signs that 2018 will see a turnaround in supply across the second hand market.
Sales activity
Going forward, assessing sales activity, the market looks unlikely to breach 1.2 million sales in 2018 with political and economic uncertainty proving a hindrance as well as the lack of stock, stretched affordability, tax changes and interest rate rises.
That being said, there is potentially some upside for activity stemming from changes in Stamp Duty. Following the November Autumn Budget, relative to other buyers, FTB affordability may improve slightly. However, with higher prices offsetting the tax saving, such a small change will have minimal impact in its goal of lifting home ownership rates. In overall terms then, RICS believe the policy change is unlikely to stimulate activity to any great extent.
Source – RICS