10 Month Low in House Price Growth:
Recent research revealed that house price growth reached a ten-month low in November. The news came about after the Nationwide House Prices Index revealed the average price of a house was 205,904 in October and £204,947 in November. (1) The 0.1 percent rise was the slowest since January (2).
Commentary:
Nationwide’s chief economist, Robert Gardner, explained that “There are some signs that, despite the uncertain economic outlook, demand conditions have strengthened a little in recent months, reflecting the impact of solid labour market conditions and historically low borrowing costs.” (1) He added that fixed rate mortgages are as popular as ever, with over 90 per cent of new mortgages contracted on fixed rates over the past 12 months. (1) Gardner presumed this to be driven by a “desire to lock in record low interest rates.” (1)
Predicted 2% Drop for 2017:
Howard Archer, chief UK and European economist at IHS Global Insight said that although house prices are predicted to rise modestly in the near future, “house prices will come under increasing pressure as 2017 progresses and may edge down over the year, possibly by 2%.” (3) The Evening Standard’s Homes and Property section supported this, in noting “Prices are actually expected to fall by one per cent in 2017.” (4)
Conflicting Evidence:
However, as we have recently summarised, Savills’ 5 Year Housing Forecast predicted a rise of 13% in house prices in the next 5 years. (5) However, it’s possible that, despite this forecasted overall rise, rates may vary on an annual basis. For example, a potential 2% fall in 2017 could be usurped by a 15% climb in the following 4 years: the end point might be 13%, but house prices can fluctuate until then. In support of this, the Evening Standard’s Homes and Property section also revealed that despite a possible drop in 2017, house prices “are tipped to increase by two per cent during 2018.” (4) Other sources generally believe that “prices will continue to rise until 2017, when things are expected to calm when the full impact of the interest rate hike will be known.” (6)
The Exclusivity of Property Investment:
It’s impossible to tell for sure. However, the barriers to home-owning remain seemingly high, and the future of property investment seems uncertain. That’s why Property Moose aims to provide more individuals with a chance to climb the property ladder, with just £10. Traditional property investment is often reserved for those with immediate access to capital, knowledge and expertise. Property crowdfunding could democratize the property market by lowering the barriers to home-ownership.
Written by Jenna Kamal
Sources
- http://www.cityam.com/254757/uk-house-price-growth-slowed-again-november-
- http://www.bbc.co.uk/news/business-38166731
- https://www.theguardian.com/business/2016/dec/01/house-price-growth-nationwide-interest-rates
- http://www.homesandproperty.co.uk/property-news/buying/uk-house-prices-postbrexit-vote-slowdown-in-2017-with-recovery-tipped-in-2018-a103906.html
- http://pdf.euro.savills.co.uk/uk/residential-property-focus-uk/residential-property-focus-q4-2016.pdf
- http://www.housepricepredictions.com/house-prices-can-expect-next-years/
Disclaimer and Legal
Property Moose does not provide any advice in relation to investments and you must rely on your own due diligence before investing. Please remember that property prices can go down as well as up and that all figures, rates and yields are projections only and should not be relied on. If in doubt, please seek the advice of a financial adviser. Your capital is at risk if you invest. This post has been approved as a financial promotion by Resolution Compliance Limited.
Property Moose is a trading name of Crowd Fin Limited which is an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (no: 574048).
