Property

House price growth to slow further in 2018 predicts Rightmove

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11th December 2017

Rightmove forecasts 1% growth in new seller asking prices in 2018 as a result of upwards price pressures in some sectors and locations mitigated by negative price forces in others.

Rightmove says "different speeds for different markets" are set to continue in 2018. Shortages of suitable properties for sale in some sectors and locations will result in upwards price pressure in new seller asking prices in those areas.

However, Rightmove forecasts that this will be mitigated by new sellers having to trim their initial price aspirations in less buoyant parts of the market, resulting in an overall increase of 1% in 2018.

This marginal annual growth rate would represent a slightly slower pace of price rises than the 1.2% recorded this year, and would be the lowest yearly increase since the 0.8% rise recorded in 2011.

Its data shows that price growth in lower and middle sectors of the market set to continue in 2018, with Rightmove forecasting average growth of 3% for typical first-time-buyer and 2% for second-stepper properties.

However top of the ladder properties, predominantly influenced by ongoing re-adjustment in London and its commuter-belt, predicted to fall by an average of 2%.

This month sees the price of property coming to market fall by 2.6% (-£8,178), leaving 2017 with an annual rise of 1.2%. The average fall at this typically quieter time of year has been 2.1% over the last seven years, and this slightly greater dip is the largest monthly fall for five years. Rightmove says this is a factor in its slightly more cautious prediction for 2018 compared to this year.

Miles Shipside, Rightmove director and housing market analyst, had this to say: “Home owners have had a good run, with every year since 2011 seeing a rise in the price of property coming to market, and the national average rise over those six years being 30.9%, equivalent to 4.6% per year.

2018 will continue the 2017 trend by being a real mixed bag of different price pressures both up and down, but the net result is that we forecast another year of a slowing in the pace of price rises. The peak in the cycle of rising prices was 2015’s annual jump of 7.4%. The following year saw price growth more than halve to 3.4%, while 2017 is finishing up at 1.2%.

Increasingly stretched buyer affordability, exacerbated as intended by tighter lending criteria and increased stamp duty for second-home-owners, is taking its toll on upwards price pressure. It is aided by a slowdown in the higher-end markets, with the influence of a re-adjusting London being a weighty factor on the national averages. The overall price growth slowdown that we are predicting for 2018 masks a somewhat tangled web of differing supply and demand factors, some favouring price increases and some in favour of price falls.

The mass market remains robust, with around 85% of transactions involving first-time-buyer and second-stepper properties. Demand is driven by many factors but two are key and over-ride the backdrop of uncertainty. Firstly, the desire to get onto the housing ladder, which is financially influenced by the bank of Mum and Dad, the rising cost of renting, and the limited time window between the effective zero-rating of first-time buyer stamp duty and prices increasing in response. Secondly is the need for space and schooling for growing families which is hard to postpone.

Demand for the right property in these sectors will nudge up prices, with the more buoyant northern half of the country seeing most of the price rise hotspots. In contrast many sellers in the upper end of the market will struggle unless they price more aggressively to tempt wealthier but more hesitant buyers. While the minority 15% of the market volume is the upper end with at least four bedrooms it wields disproportionate influence on national averages as the higher prices mean that every percentage point drop has a greater effect.”

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