For some, the end of the year can’t come quick enough but I suspect there will be many within the housing and mortgage markets who would quite like to know that 2018 will follow the same pattern as the previous 12 months.
Which of course isn’t to say that 2017 has been an incredible year for all stakeholders but, given what could come over the horizon, we might all agree that any sort of predictability about what happens next might be preferable to not having a clue how the market might perform.
Don’t get me wrong, from our perspective and I’m led to believe many others, 2017 has been a good year. Business volumes look to have held up and despite there being a clear drop-off in some sectors, perhaps most notably buy-to-let purchases, others have performed well, such as remortgaging, while others could have potentially been given a boost by the Budget – first-time buyers for instance.
The big questions however remain unanswered and those of course focus on the outcome of the Brexit negotiations – don’t forget that at this time next year we’ll be just a few months away from the UK formally leaving the EU – and what impact they will have on our economy, and indeed our political environment. Despite what many ardent Brexiteers might think, there is truly no way of knowing how this might all come out in the wash and just what will transpire.
We’re already talking about a £40bn exit payment, and that’s before we’ve even attempted to get any sort of trade deal up and running; who knows whether this can be agreed and what the terms will be? There has been further talk this month about a ‘vote’ on the terms as they’re agreed, not just by Parliament but the UK people perhaps in the form of another election should this current minority Government be unable to fulfil the full five-year term. Given its reliance on the support of the DUP, who would bet against another Election sooner rather than later?
It’s this level of uncertainty that preys hard on our housing/mortgage markets – advisers and agents have understandably talked about a drop-off in enquiries from EU nationals living here, although given the recent first-stage UK/EU deal which appears to cement their status within this country, perhaps this will now pick up again. Others might well be worried about their jobs – especially if their companies have signalled they might potentially move elsewhere post-Brexit – and there might be a growing number of homeowners/potential homeowners who might well prefer to sit on their hands until a degree of certainty is known. Certainly, you might well choose to stick with your own status quo right now rather than make any big-ticket decisions.
The full outcome of the decision in the Budget to withdraw stamp duty costs for first-timers purchasing homes up to £300k has clearly yet to be seen. There is a big difference in opinion on whether such a move will actually get more first-timers onto the ladder, with many arguing that it only helps those who were going to buy anyway but doesn’t help those who are not yet at this point. Indeed, the Office for Budget Responsibility (OBR) said that, in its view, the measure actually helped existing homeowners even more than first-timers as it would simply increase house price levels. One assumes the reasoning behind this is that, by not having to save for the stamp duty costs, this ‘extra’ money would simply go into first-timers putting in higher offers in order to secure the property.
Again, it’s too early to say just how this might play out, but when the market still has considerable supply-side issues to overcome, and demand continuing to outstrip it, then one can’t expect house prices levels to change any time soon. Indeed, while the stamp duty costs would have been a factor for any potential purchaser, the bigger overall issues are still around securing the money to save a deposit, being able to access affordable housing, and also having the opportunity to secure a suitable mortgage based on the post-MMR tighter affordability checks. The Government’s changes to stamp duty will not impact on these concerns one iota.
Which is not to be too down on the Government of the day because it’s obvious that housing is a significant priority for it, not least because it is seeking ‘non-confrontational’ issues which can be passed through Parliament. The focus on delivering 300,000 new homes each year is to be commended – although you might have thought it would want to deliver this earlier than the middle of the next decade – and other areas, such as support for smaller house builders and a stop on developers holding onto land, are both positive steps.
So, there are clearly a number of positives to be taken forward in terms of supply it’s just that we await to see how wider issues might impact on the overall economy and how this might impact the performance of the UK’s housing and mortgage market. As always, it’s difficult to predict what might happen, but perhaps for 2018 it is more difficult than in previous years – Brexit, and its negotiations, loom large over all of us and it’s likely that we’ll all need to be fleet of foot and able to react quickly as the year progresses.