UK Property Market: How did January 2017 fare?
We’ve rounded up the experts’ overview of how the start of 2017 went for the UK property market. Overall consensus agrees with a stronger than expected January but nevertheless dampened by Brexit uncertainty.
Martin Ellis, Halifax housing economist, said:
House prices in the three months to January were 2.4% higher than in the previous quarter; marginally down on 2.5% in December. The annual rate of growth eased to 5.7% from December’s 6.5%, and is well below last March’s peak of 10.0%.
The quarterly and annual rates of house price growth remain robust even though they are lower than in spring 2016. UK house prices continue to be supported by an ongoing shortage of property for sale, low levels of housebuilding, and exceptionally low interest rates. These factors are unlikely to change materially during 2017. Nonetheless, weaker economic growth and increasing pressure on spending power, along with affordability constraints, are expected to dampen housing demand, resulting in some downward pressure on annual house price growth during the year.”
Halifax House Price Index
Robert Gardner, Nationwide's Chief Economist, said:
The outlook for the housing market remains clouded, reflecting the uncertainty surrounding economic prospects more broadly. On the one hand, there are grounds for optimism. The economy has remained far stronger than expected in the wake of the Brexit vote. Recent data indicates that the economy didn’t slow in the second half of 2016 and the unemployment rate remained stable at an 11-year low in the three months to November.
However, there are tentative signs that conditions may be about to soften. Employment growth has moderated, and while wage growth has edged up in recent months, in real terms (i.e. after adjusting for inflation), earnings growth has already slowed, as shown in the chart (above, right). With inflation set to rise further in the months ahead as a result of the weaker pound, real wages are likely to come under further pressure. Employment growth is also likely to continue to moderate, should the economy slow as most forecasters expect.
Nationwide House Price Index
CRBE Marketview Monthly Index
Rental values remained stable in January 2017, increasing 0.1% on average across UK commercial property. The Industrial sector continued the strong performance seen at the end of 2016 into the new year, outperforming all other sectors with rental values growing 0.3% over the month.
UK All Property capital values rose by 0.3% on average, with Outer London/M25 Offices recording the strongest growth for the month, increasing 0.6%. The Retail Warehouse sector, recorded capital value growth of 0.2%, up from 0.1% in December, going against the historic trend of a weaker performance in January compared with December, which was seen in all other segments.
This trend of a quieter January also affected total returns across All UK Property, which fell from 1.1% in December to 0.7% in January. Following a positive end to a turbulent 2016, January saw a relatively solid start to 2017, with industrials continuing to lead the way.
Savills Market in Minutes: UK Residential Development Land
The development land market has returned to more normal conditions at the end of 2016 recovering from the market caution immediately after the EU referendum.
The strongest demand is for oven-ready sites in established residential areas or close to good infrastructure. Generally, there is less demand for sites in more rural or economically weaker markets and for those needing remediation.
In areas where there is less intense competition for land, more land owners are engaging with joint venture agreements with developers, to generate higher land value over a longer period.
