Following a turbulent 18 months for the UK, the arrival of 2018 brings with it a number of reasons for optimism. Below Lawyer Monthly hears from Paresh Raja, CEO at MFS, on real estate, housing and property developments to look forward to in the coming year.
Since the EU referendum in June 2016, the country has witnessed a series of defining political and financial shifts: David Cameron’s resignation as Prime Minister and Theresa May’s appointment as his successor; interest rates being cut to a record-low 0.25% before then being raised back to 0.5%; Article 50 being issued and Brexit negotiations officially commencing; a snap General Election in which the Conservative Party lost its majority, leading to the Tories entering into a confidence and supply agreement with Northern Ireland’s Democratic Unionist Party; and not one but two Budget announcements delivered by the Chancellor Philip Hammond in 2017.
Amidst such a catalogue of noteworthy political and economic events, it is no surprise that many consumers, businesses and investors have been hesitant to press ahead with significant, long-term plans. Indeed, such instability will inevitably impact almost every industry, testing their respective strengths.
With that being said, the property industry’s performance across the past year-and-a-half has been impressive. Figures released by Zoopla in the New Year show that the average British home added £28 to its value each day in 2017 – in total, the residential property market is now valued at £8.29 trillion, which is a 3.5% year-on-year rise. And while London and the southeast saw a slowdown in its remarkable property price growth, many other regions continued to flourish last year.
Consequently, despite the doom and gloom coming from some quarters, the real estate sector – and indeed the UK’s population of homeowners and prospective homebuyers – has good reason to enter 2018 in a confident frame of mind. And such optimism is supported by the fact that the likes of JLL, Savills and Halifax are all forecasting stable growth in house prices in 2018 before accelerated growth in the years that follow.
Importantly, after a long chain of political twists and turns, the coming year presents an opportunity for much-needed calm and stability. Meanwhile, the slow but inevitable progress that we can expect from the Brexit negotiations over the coming 12 months will likely provide greater clarity regarding the long-term outlook for the country. And while Brexit will, of course, still hang overhead as an ever-present question mark in the short-term, the property market has already demonstrated its resilience for coping with this issue in the 18 months since the referendum. This, coupled with the long-term projections for the continuing growth of the housing market – Savills, for example, has forecast that UK house prices will grow by 14.2% between 2018 and 2022 – gives cause for optimism.
However, to enable the property industry to progress in 2018, the Government must stand firmly by its housing agenda. Namely, it must continue to find ways to assist those looking to get onto the property ladder; this will not only assist those seeking to buy their first home, but also inject movement across the market as a whole. Cutting stamp duty for first-time buyers in November’s Budget was a useful step towards this goal but there is still plenty more to be done this year.
Ensuring housing supply is increased will be vital. To do so, the focus ought not to be solely on increasing the number of new homes being built. But both the Conservatives-led minority Government and private investors must recognise the opportunities available to renovate and refurbish existing run-down houses that currently sit empty across the country – figures suggest that there are as many as 1.4 million such properties in the UK.
In 2018, as the property market looks to emerge successfully from a very challenging couple of years, there are plenty of reasons for optimism. A number of difficulties undoubtedly remain, but the consistent demand for bricks and mortar, experts’ medium-term price growth projections, and the directed efforts to get more people moving onto and up the property ladder combine to create a positive outlook for the year ahead.
