The property markets are increasingly looking up for tenants and first time home buyers in the UK. With these prospects, investors and tenants need to pay attention to the influential factors that will drive the market in 2018 and beyond in order to come out strong. According to the Guardian, the stability of the market in 2018 will be shaped by the anticipated rise in the interest rates, construction of new homes and rise in first time buyers. The reductions in the stamp duty and growing appetite to develop luxury apartments and mixed use facilities will add to the glamour. The construction of the 56 storeys, One Nine Elms in London points to the new optimism.
The other massive development expected to spruce the London sky is the 67 storey residential housing by Spires in Docklands. The complex is slated for completion in 2020. Statistics indicate a total of 217,000 new homes developed between 2016 and 2017 will come also into stream in 2018. However, the figure is 80,000 short of the declared government target of 300,000. In 2015 some 120,000 houses were snapped by landlords using the Buy to Finance facility. This number is expected to fall to 80,000 in 2018 according to a report tabled by the influential Council of Mortgages and Lenders (CML). Almost all indicators show an uptick of first-time buyers in 2018.
First time home buyers will be favoured by rising taxes and tough lending criteria. To the detriment of property speculators, the new buyers will also enjoy the abolition of stamp duty for properties that cost up to £300,000. The move by former Chancellor of the Exchequer, Phillip Hammond will see 80% of buyers save up to £5,000. The Office for Budget Responsibility expects the amount to rise marginally in 2018. Tenants will find reprieve after consecutive increases in rent. Rental rates across the UK rose by a meagre 1% in 2017, but fell in the London market. Since inflationary concerns will continue to weigh down salaries, landlords will be reluctant to increase rental rates in 2018.
The 2018 Leeds and Yorkshire Property Market Outlook
There has been a lot of talk about the expanding Yorkshire’s property market lately, with many experts marking it a hot spot. The market is supported by a diverse economy and the several centres of trade and commerce, chief among them being Leeds and Sheffield. Leeds ranks as one the largest financial centres in the UK and home to several huge industries, including textile manufacturing, coal mining and service industries employing thousands of people. A report published early in 2018 by the Yorkshire Post samples predictions of housing experts regarding the Yorkshire Housing Market.
The effects of this development has led to scarcity in stocks, and more so at the closing weeks of 2017. Closer home in Yorkshire, Beadnall attributes the positive tidings to great property locations near amenities like quality schools, picturesque self-contained villages and road and rail infrastructures. Due to these advantages, neighbouring villages such as Ripon, Boston and Harrogate have become attractive to a cross section of buyers. The other development likely to upset the market is the impending ban on tenant fees. Weighing in on the issue, the Managing Director of Manning Stainton estate agent, Mark Manning is positive that demand in the middle and lower tier markets will remain healthy in 2018 although some pockets will witness price resistance.
He adds that the number of first time home buyers went up in 2017 by an impressive 6%. The figure was 37% higher compared to 2013, and this is all thanks to the aggressive Help-to-Buy program instituted by the government. The program tacitly received a boost of £10 billion, which is expected to run until 2021. Manning expects the top-end market to remain unsettled due to the overreaching effects of Brexit. His reading of the 2018 indicates a tight housing supply and subdued mortgage rates due to the Help-to-Buy program. However, the aggressive entry of first time and second home buyers into the market will lead to slight increases in prices. Changes in the stamp duty targeting first time buyers is also going to play a big part in defining the market.
Manning’s hot spots to watch include Crossgates and Pudsey. Recent investments in East side of Leeds are also testament to this fact. According to Andrew Wells, a property consultancy and auction specialist at Allsop in Leeds thinks the housing market in Yorkshire and Humberside will slow down in 2018. In his estimation, the Yorkshire region has viable price affordability to earnings ratio, which means prices, will stabilize and stay clear of systemic falls. The lack of confidence in the economy may bring unease and hamper transactions, but the government supported Help to Buy program and changes in the stamp duty should stabilize the market and play in the hands of first time buyers. The initiative will continue to lift the market since it contributes up to 80% of sales of new developments.
Wells is also optimistic that renters in Leeds and Sheffield will enjoy great choices, especially in 2019 due to schemes like Build to Rent initiative. Justin Dugdale, the Director of real estate agency, Yorkshire Finest affirms that the bullish run being experienced in the Yorkshire property market is going to pick speed in 2018 after the disappointment of 2017. He attributes this to the growing market confidence and recent budget pronouncements on stamp duty. Dugdale expects the Yorkshire regional property prices to strengthen this year with an increment of between 4 to 5%. The Director at Dacre, Son and Hartley estate agent, Tim Waring expects the market to record modest, single figure price gains in the first 6 months of 2018.
The prospects are as a result of supply pressures premised on strong demand across Yorkshire’s prime markets that cover Wetherby, Harrogate and Leeds. The development is going to be a huge relief to sellers looking to cash in on the short term. Because of sound mortgage finance, Waring doesn’t think the festering Brexit headlines will influence people’s decision on whether to move homes or stay put. He concurs that new home buyers will benefit from the recent stamp duty relief and the Help to Buy program. To maintain future growth, Waring encourages experts and estate agents working in the property industry to embrace technological advances because property buyers and sellers understand the benefits that emanate from accessing services on the high street and online platforms.
Edward Hartshorne, the proprietor of the York based estate agency, Blenkin & Co predicts a more buoyant market in 2018, with more buyers selling in London and Home Counties. In his fair assessment, buyers are quickly moving to acquire York’s top quality houses due to availability of good infrastructure. Families, on the other hand, will cash in on the opportunities afforded by Brexit. The attractive London property market and North Yorkshire centres like Leeds, York and Manchester will fuel the boom. The Sheffield property market can only be described as strong and stable, says Nicola Spencer of Sheffield’s Spencer’s estate agency. The city centre is especially lucrative since there are many developments coming up, which should ensure a steady supply over the coming years.
According to Spencer, the fourth quarter of 2017 witnessed a resounding property instructions and strong interest from all market stakeholders. However, the top market should see sluggish movement with realistic expectations becoming the norm in a development that is expected to usher in more selling and buying opportunities. Richard Welpton, who works for Quick and Clarke real estate agents, says the property market in 2018 will experience subtle changes as a result of increase in home prices and reduced housing stock. He, however, quips that this will only be realized if the interest rates remain unperturbed. In conclusion, Welpton sees a 3% rise in first time buyer properties, which come in spite of the Chancellor’s promise to remove the stamp duty. East Yorkshire is one of the markets to watch.
With the prevailing steady demand and diminishing supply, real estate experts see a strong Leeds city centre prospects over the next 10 years. According to a JLL predictions published in the Yorkshire Post (2), the new housing paradigm should be welcomed because it demonstrates positive developments on the economy, the government, and buyers and sellers alike. In the immediate future, JLL sees a 2.5% growth in the housing market for the next 5 years. Developers, homeowners and investors looking to make quick returns will likely be disappointed by the stable UK housing market, which has been experiencing less volatility.
Most of the expected growth in rental rates and sales prices will be experienced in the city centres like Leeds, Manchester and Liverpool. The ensuing scenario is largely attributed to the constrained housing supply. Projections indicate that Leeds will witness strong growth going into 2022. The city’s economy is expected to grow by 2%, while that of Manchester will experience an impressive 2.7% annual growth, a figure well above the national and regional averages. In terms of employment, Leeds and Liverpool should see 0.6% and 0.4% annual growth rates respectively, with Manchester recording a much higher 1.3% growth between 2018 to 2022.
Analysts at JLL recognize that the Leeds Buy to Rent market is among the most active in the UK. The market is buoyed by a string of affluent students and young professionals. The City currently boasts about 3,600 build to rent properties; 2,000 private sale apartments and 1,000 build to rent apartments. The most notable rental apartments under construction include the Grainger development consisting of slightly over 240 flats and Dandara’s 744 apartments located on Sweet Street. A new urban regeneration scheme dubbed SOYO is expected to bring into stream 515 apartments. Moving into 2022, JLL sees a promising rental growth of 3.5% in the city centre.
These figures will push up the average price of a 2 bedroom flat by 2.8% to £186,000. The price growth rates in Leeds will closely follow that in Manchester, where analysts anticipate a 4% annual growth for the next 5 years. Staying in Leeds, JLL projects a strong demand for quality owner-occupier units over the same period. The Yorkshire market has a huge potential for investors considering the huge population and burgeoning commercial centres. According to Prinvest, the Yorkshire region is home to more than 5.3 million people. The robust house price here grew 20% in 2017 compared to 2013. The growth in the region’s cities is also expected to beat Brexit concerns.
Your Local Estate Agents
Renewed optimism in the property markets has pushed many estate agents to open shop and expands operations in Yorkshire. Priestley’s is a leading estate agent in the region; its operations cover centres like Leeds, Bradford and West Yorkshire. The agent understands the Yorkshire market very well, and this has made it easy for buyers and sellers to make the right decisions. Through its online platform, buyers and tenants can find homes for sale and to rent. The comprehensive listings indicate pricing, address and the number of beds in a property.