Hometrack report says London house prices will drop by 3% in 2017
07-12-2017
Hometrack report says London house prices will drop by 3% in 2017
Average house prices across London are forecast to fall in 2017 whilst property prices in the rest of England and Wales are expected to increase by 2% to 3%, the report states.
The East of England and the Midlands are expected to see the biggest growth as rents are currently rising by close to 5% the analysis showed.
Residential rental growth has varied dramatically over the last couple of years. Depending on region and other local economic factors as well as earnings, increases changed by anything between 45% to -7%.
London still has the lowest rental affordability according to Hometrack. The demand for rental housing has grown significantly over the last decade and effects can be felt across the country, however region outside of England’s South shot the highest levels of affordability.
The Hometrack report analysed data tracking back to 2004 and revealed that rents dropped by 6% to 12% during the financial crisis, a time in which accidental landlords entered the market whilst limited employment weakened demand.
Following this, from 2010 onwards, rental growth outside of the capital has mainly tracked the growth of average earnings with a median of 2.7% annually.
London has overall seen a steeper increase in rental prices with an average of 4.5% yearly. The city, however, also experienced weaker rates during 2013 and 2017.
The report continues by highlighting that increasing house prices and tighter lending criteria keep making it harder for first-time buyers to own their home.
The analysis also showed that rental affordability across the country has remained fairly stable over the last 12 years with rental costs accounting for 27% to 32% of the average annual income.
This may not come as a surprise as tenants naturally only have a certain amount of funds available for rent. This aspect of the property market also makes investing in buy-to-let such a lucrative business for many as it is an asset class where the underlying performance is linked to earnings growth.