Last year wasn’t the best year for the property market. With the housing crisis a very real problem now, the Government are trying to save money where they can so that they can spend it on building affordable housing for first-time buyers. The aim is to stop the never-ending spiral of renters who can’t save up enough money for an initial deposit, due to paying inflated rental prices. So, just what did we learn from the state of the property market in 2016? Let’s take a look:
There aren’t enough homes
Something that rang clear throughout 2016 was that the Government need to build around 300,000 homes each year in England to keep up with the growing population. This has been recognised and acted on but chancellor Philip Hammond still only has plans for 140,000 homes by 2020-21. The plan is to build these affordable homes on brownfield sites and sell them to 23-40 year olds for 20% below their actual worth to give them a much-needed step up onto the property ladder.
Landlords are going to lose out
Despite the massive shortage in affordable housing, landlords providing accommodation to people with no alternative are no longer going to receive any relief when it comes to tax. With new Stamp Duty laws adding an extra 3% onto second homes and a 20% tax on the overall income of rent, 2016 saw many buy-to-let landlords leave the market. Sales were down 64% on buy-to-let properties by November and landlords that aren’t selling up have resigned to the fact that they might have to hike their prices up to stay profitable in 2017.
The property bubble might have popped
House prices got a bit out of hand in 2016 but instead of continuing to rise at an alarming rate, by the end of the year they had steadily started to flat line out. According to Nationwide, they have predicted that growth in house prices will more than halve in 2017 to 2% from 4.5% in 2016. Whether this remains the same throughout the rest of 2017 is not clear yet but it’s a good sign for first-time buyers trying to get on the housing ladder.
It’s the age of renters
Despite landlords losing out, more people are learning that they can earn extra income from renting out spare rooms to lodgers. Websites such as Airbnb and Spareroom.com mean that individuals can find rooms in sought after locations for as little as £400/month or £20/night as long as they don’t mind living with the home owners. It’s usually far cheaper than a hotel or an actual rental property so a huge benefit to the lodger while giving homeowners some extra pocket money.