The housing market in 2016 Part 1 – industry experts share their predictions

Posted 5 January 2016 by Keith Osborne

WhatHouse? starts its series of articles featuring the predictions of property experts on the UK housing market in 2016...

Our homes are rarely from our minds and seldom from the headlines. Last year, while we escaped an interest rate rise from the Bank of England, there were momentous announcements for house-hunters and buy-to-let investors, especially those with their eyes set on new homes.

Few of these moves could have been predicted a year ago, but we’ve asked some of the housing industries big players to use their expertise to try to foresee the next 12 months on the property market.

Dave BexonDave Bexon, group sales and marketing director for national housebuilder Redrow Homes, is in a positive mood: “An improving economy and strong underlying demand for more homes, coupled with a lack of supply in many areas, continues to fuel the market. The Help to Buy ISA should encourage more first-time buyers into the market longer term, although the impact will be gradual.

“Help to Buy equity loans continue to stimulate the new build market, enabling people to buy with just a 5% deposit. Interest rates are not expected to rise until late 2016/early 2017, so mortgage lending should stay relatively cheap and experts are predicting further house price increases.

Jason Rishover, chief executive of family-run developer Heronslea Group, says: “We build in North London and Hertfordshire, and the outlook at the moment remains positive. A lot of our customers are downsizers, taking advantage of the price rises over recent years and swapping their family home for modern lateral apartment living, which has become the new bungalow for retirees.

“The market is still strong due to high demand outweighing supply – however an increase in interest rates or a sudden surge of property on to the market will impact sales and values. We are experiencing strong off-plan sales across the majority of our developments with the exception of high-valued homes - anything above £1.5m/£2m has been affected by the rise in stamp duty.  We are still selling at this price bracket but it is certainly slower.”

Clare Crawford, commercial director at Aster Homes, which builds open-market and affordable homes in Central England, the South and South West, sees a need for many housebuilding companies to adapt quickly to the market and political policies: “The Chancellor’s announcement in his Autumn Statement of a doubling of the national housing budget is certainly a boost for the housing sector and a positive step towards increasing housing supply.

“The need for more homes is very real and the sector needs to adapt to ensure it plays its greatest role in addressing the housing shortage. This will lead to housing associations becoming even more innovative in the way they approach development of new homes – looking at the open market, joint ventures and new funding models.

“Shared Ownership remains a key product for us; it’s an affordable and accessible way for many people who are currently priced out of the market to make their dream of owning their own home a reality.”

Martin Bikhit, managing director at London estate agents Kay & Co, is cautiously welcoming the new year: “We expect to see the sub-£1.5m market continuing to be the most buoyant sector, especially with domestic buyers - a key theme of the second half of 2015 was the movement in this sector of the market. There still is, and always will be, demand for super-prime homes; we have had several genuine enquiries from Middle Eastern and Chinese families seeking £50m-plus homes on the edges of Hyde Park, Mayfair and in Regents Park. That said, there is a limit to what the super-wealthy are willing to pay and this cash-rich sector of the market is happy to wait for the price of a property to match the market value of a property.”

Brendan Cox, managing director of Waterfords, says: “What many people are not perhaps recognising is that we have quite unique market conditions going into 2016, where both vendors and buyers stand to benefit in some way. Vendors, particularly those looking to downsize, are profiting from peak property prices, some of which have not been seen since before the crash of 2008, driven by unprecedented demand. Conversely, whilst high property prices make borrowing more of a challenge for buyers, and certainly those purchasing for the first time, they are also benefitting from exceptionally competitive mortgage rates, both fixed and variable, thus making 2016 a window of opportunity for all.

“The fact is, people will still do whatever they can to get on the housing ladder, but ironically, most are increasingly frustrated by a lack of choice, as many homeowners are opting to ‘improve, not move’. As we are all too aware, there is a ceiling for how high property prices will go before the bubble bursts, or government intervention is required.  So, spending too much on improving a property in an overheated market may not always offer the best return.”

Andrew EllinasAt agents Sandfords, director Andrew Ellinas concurs: “We have seen many potential vendors choosing to stay put and spend the money that would have been expended as stamp duty on a purchase in refurbishing or extending their present home. This is currently particularly evident with family properties, and something we should expect to see moving into the New Year.

“The stamp duty changes that took place towards the end of 2014 have depressed the market across the board in prime Central London (PCL) and forecasts for next year have altered in light of this. I predict that price increases in the PCL market in 2016 will be modest with some areas experiencing growth and others seeing prices remaining fairly static.”

Stuart Law, CEO of Assetz for Investors, sees a troubled year for London: “UK wide house prices will likely grow by around 6% next year, as demand for housing continues to outstrip supply. London meanwhile will see a reversal of fortunes, and we could even see house price growth in the capital turn negative as the effects of unsustainably high prices and recent increases to stamp duty for wealthy purchasers deter investors. I expect we will see a big decrease in the number of London apartment sales to Chinese buyers as capital controls in China start to tighten and their local economy continues to experience difficulties.”

Outside the capital in East Anglia, David Bentley, head of new homes at Bidwells says: “'Cambridge has continued to make the headlines this year with 'fastest-selling location', 'top university property market' and 'biggest riser', although in truth, growth has not been so rapid this year in the city.  With strong double-digit growth in the new homes sector for 2014, expectations for a more modest growth in 2015 have been proven with circa 6% anticipated for year-end.”


Search  



Click here to see your activities