Savills is warning that while low interest rates will probably keep house prices relatively static, transaction volumes are likely to remain suppressed for the rest of 2017.
“Home mover and buy to let investor numbers remain flat. First time buyers are the only growing buyer group, supported as they are by Help to Buy and Bank of Mum and Dad cash” says Chris Buckle, director of Savills residential research.
Buckle warns that “the brakes will be put on consumer spending this year” and gives a number of key trends that he says characterise the current housing market.
These are:
- Early signs of weakening average house price growth with the Nationwide showing falls across four regions, including the East of England which was the strongest performer in 2016;
- Outer London and its commuter belt continuing to show the highest price growth, but with transaction volumes relative to pre-downturn levels being lower in London than in any other region of the country;
- The Bank of England’s Financial Policy Committee becoming increasingly concerned about weak underwriting standards for unsecured lending. “Any moves to deal with this could lead to a tightening of consumer spending power, with potential knock-on effects for future house price growth” warns Buckle.
- A background of falling levels of new instructions and lacklustre buyer inquiry volumes. Buckle says this is in line with the Savills forecasts that total sales will fall from 1.245m in 2016 to 1.125m this year.
“While we expect the mainstream housing market to continue to be underpinned by low interest rates, the brakes will be put on consumer spending this year. These conditions would support house prices at their current level, but transaction volumes are likely to remain suppressed” he concludes.
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2358 Reads 0 Comments to date. I’d better give mine!
I don’t get it. How can underpinning the housing market with low interest rates whilst at the same time putting the brakes on consumers spending, support house prices at their current level?
Reading between the lines, the stated conclusion by Savills is predicated upon the preset preference to not let house prices fall on any account, even if this means that transaction volumes would have to slump in order to retain such price levels.
Surely, it would be better if house prices were allowed to find their own level (i.e. their market price level, even if this means a reduction) so that transaction levels were allowed to increase; in order to cope with the true market requirements.
It sounds to me as if the banking sector is trying to dictate these concepts and it would rather accept decreasing transaction volumes than see lowering house prices.
My question is:
Do estate agents know what is really going on here.
Are most estate agents happy to see such cuts in transaction levels because doing so will severely impact upon their fee receipts as these will be based on completed sales transactions in the coming months?
Those hoping to sell and/or move house will also be similarly inconvenienced.
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