Property Trends to Look Out for During 2017: Part One

Property Trends to Look Out for During 2017: Part One
2016 was significant for many reasons - but in terms of the wider economic and political landscape, it was the United Kingdom's decision to leave the European Union and Chancellor George Osborne's changes to stamp duty taxation, that had the most dramatic impact on property owners and investors.

Given these upcoming changes to the UK's economy, we have written the first part of our property market trend predictions to look out for during 2017.

Which ones will you need to keep an eye on?

Dwindling home ownership amongst young people

According to the Resolution Foundation, property ownership in England reached its peak figure in 2003 when 71% of households owned their property, either through a mortgage or outright.

Only a few years ago, homeowners were able to take out mortgages without a deposit which according to Nationwide Building Society, meant the average cost of a property was able to rapidly grow at a rate of around 20% a year.

Times have certainly changed - home ownership in 2016 fell to its lowest level since 1986 at 64%, with Greater Manchester, London and cities across the West Midlands and Yorkshire seeing figures nosedive over that time period.

Another report from the Local Government Association has revealed that the number of 25-year-olds who own their own homes has more than halved in the last 20 years, from 46% to 26%.

The report highlights a disparity between homeowners and people - often younger residents - in unaffordable and often unsuitable rental accommodation who are stuck in short-term contracts that loom over them, causing uncertainty. In August 2016, Liberal Democrat leader Tim Farron warned that the housing crisis was "turning into a national emergency" and that more needed to be done. He added: "For millions of young people, the chance to get the excitement of being handed over the keys to a home they can call their own is a dream that's fading away fast."

The most-affected areas are Greater Manchester, South and West Yorkshire, and the West Midlands, which have all experienced double-digit falls in homeownership since the early 2000s. It was reported that in 2003, 72% of households in Greater Manchester were owners. The figure has now fallen to 58%.

To ease the crisis, local authorities need to liaise with the government in regards to land assembly. Having a proactive approach to how land can be unblocked for homes and economically beneficial development is important.

The government is already trying to tackle this by requiring local councils to come up with effective plans that will speed up developments, and require developers to use land better. It's reported that 40% of planning authorities do not have correct or effective measures in place to meet demand for housing.

Government ambition, including legislative changes and aggressive house building schemes, are two other ways to ease the crisis. However, as the next point highlights, it's easier said than done.

Arguments over building targets and Green-field construction

The government originally pledged to build a million homes during this parliament up until May 2020, however, Labour has accused ministers of dropping their promise quietly at a time when house building is falling way shorter than demand.

A review by the National Office Audit (NAO) reported that based on current housebuilding figures, the target will only just be met by December 2017, which will require 174,000 new homes a year until then, with 190,000 homes built during 2016.

Communities Secretary Sajid Javid will shortly publish a whitepaper that will outline how the government plans to improve upon successive governments' house building efforts Theresa May has called "nowhere near good enough." The key issue at the moment is where these new homes will be. In Manchester, plans have been drawn up to build thousands of homes on Greater Manchester's green belt - potentially providing at least 20,000 homes.

Picking out green belt sites may be a highly controversial topic to many, but the fact is that there are not enough homes currently being built. The green belt covers around 13% of England's total land and whilst some boroughs are full to capacity, there are others who are more green belt than not.

A green belt atlas identified three English local authorities (Tandridge, Epping Forest and Sevenoaks) where more than 90% of land is green belt. There were also two London boroughs which were more than 50% green belt.

Whilst it's important to keep green land protected, these green belts are limiting city expansion and potentially strangling towns. For all the talk of there not being anywhere to build new homes, surely a serious discussion needs to be raised about how green belt areas can be used more effectively.

Stay tuned for the second part of our property market predictions for 2017.
Article provided by LPC Living.