Nick Churton of Mayfair Office gazes into the property market crystal ball for 2017.
The national press is fond of repeating what some estate agency firms have to say about the luxury market – especially in central London. This seems to suggest that it is an important part of the property market. Well it isn’t. It is the other end of the market which is important. The lower end drives everything. So if we want to understand about the health of the property market as we move into 2017 we need to look at how first time buyers might fare not at the relatively small market of houses for the super rich.span>
But predicting anything at the moment seems pretty futile, whether it is the economy, politics, the global order, Europe, the USA or property. Yet one thing we do know: first time buyers now have a better chance of getting on the property ladder than for many years. Interest rates remain low, mortgage lenders are keen to lend and investors with cash have been rather quiet - thanks to George Osborne, who increased stamp duty for buy-to-let purchasers and stripped the mortgage tax relief advantage from the same group.
This has opened the door of opportunity a little wider for first time buyers. Yes there are areas where buying will remain a challenge – those areas of the country where prices are historically high such as in or around major cities. These are places where first time buyers may find it even harder to raise sufficient deposits despite larger than average earnings. But for other areas in the country things are a little easier, especially in those places where sellers are being persuaded that the values of their homes are not necessarily what they wish them to be but are what buyers can actually afford.
So who knows what 2017 will bring. If 2016 is anything to go by there will be lots of surprises. But one thing never changes - people will still want roofs over their heads. Young adults will want their independence; many will move to different parts of the country for work reasons. Inevitably there will be new relationships and young families. When these things happen a home is required. The nation is built on this cycle of life and ambition, which is why the entry level of the property market is always more important than how a relatively few very wealthy people choose to spend their money.