Why Should You Buy a House in 2017

Why Should You Buy a House in 2017

March 3, 2017

For many citizens across the country, the prospect of owning their own home is a long-term dream, something that they want to achieve “someday”, when the time is right. However, looking at the UK property market today, it seems like this year could in fact be the ideal time to buy a new home; there’s plenty of property coming onto the market, prices are generally favourable and rents look set to increase. Now more than ever, there are good reasons why you should look to buy a home in 2017.

Increasing Rents:

In the autumn of 2016, the UK Government announced that it would be abolishing tenancy fees – tenants would no longer be liable for any of the costs of beginning their tenancy. This is a good sign for tenants, in some respects, because many unscrupulous lettings agents will inflate their prices to make a profit, charging tenants excessive sums to complete their tenancy agreements, inventories and other paperwork.

However, it does cost money to draw up all these documents, and a well-run agency does work hard to ensure that the tenancy begins smoothly and on time. They’ll still be incurring costs when setting up a new tenancy, but they’ll have to subsidise these costs by charging landlords more in administration fees, and with landlords already hard-pressed to make a profit they’ll be forced to increase rents instead. Thus, the cost of renting is likely to rise steadily, as landlords are forced to raise rents in order to maintain their level of profitability.

A more subtle effect of this change is likely to be a decrease in the amount of rental properties available. As it becomes less profitable to be a landlord, more and more are likely to step away from property ownership, meaning that the amount of available property to rent drops, and the market becomes more competitive. When supply decreases, but demand remains the same, suppliers can command higher prices for their products.

Property Prices Slowing:

A general effect which is making home ownership in 2017 an attractive prospect is the generally slow nature of the property market. House prices are, as ever, increasing, but the rate at which they’re growing has slowed since the beginning of last year. This is due to a combination of factors, all of which combine to make it cheaper and easier to find a property to buy:

A Million New Builds by 2020:

The Government recently pledged to construct a million new homes by the year 2020, and outlined a series of stimulus packages to jump-start this project. A million new homes in three years is certainly achievable, and in the 1950s and 60s this was standard practise, but since the mid-1970s housebuilding has been in steep decline. Whether the Government is capable of creating new homes on this scale is debatable, but the various funding options and incentives on offer look set to increase housebuilding for the foreseeable future. More housing stock means less competition, and less competition means lower house prices; as these new homes come to the market, houses are likely to become more affordable.

Buy-to-Let Sales:

Owners of buy to let properties have been hard-hit in recent years, with increases in stamp duty, lowered tax relief and (as we’ve seen above) potentially higher property management costs making it less profitable to be a landlord. This means more and more landlords are likely to call it quits and put their investments on the market, opening up their property to new buyers; this influx of homes onto the market will tip the scales in favour of buyers, and help to alleviate the competitiveness of the current market.

Market Uncertainty:

The imminent prospect of exiting the EU has many investors rattled, and no-one’s quite sure what to expect in the next few years. In times of uncertainty, house prices tend to slump somewhat, since there’s not such a frantic demand for long-term investment in real estate – therefore, it’s easier to find and bid for a home, and potentially negotiate a better price. A less competitive market incentivises sellers to find a buyer, and lessens the chances of buyers being caught in a bidding war.

Buying a Home in 2017

The combination of factors outlined in this article highlight some of the reasons why 2017 looks like a good year to buy a home. In general, though, the trends on display for this year will have long-term effects, and are likely to persist throughout the coming years as well. It might well be the case that the market continues to offer buyers more attractive opportunities for several years to come, so plan ahead and start saving!