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.
- 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.