With the spring market almost upon us, we outline below the main influences on the property market in North Yorkshire, give our opinion on what is likely to happen for the rest of 2017 and release the findings from The Search Partnership House Price Index 2017.
UK market 2016
There were two significant influences on the housing market in 2016; stamp duty and the EU referendum result.
The stamp duty changes introduced two years ago had already started to have an impact at the top of the market, with the upfront costs of buying a home having increased substantially. The significant change in April 2016 was the introduction of a higher rate of duty on second homes. The £93,750 in stamp duty to buy a £1.5m house has now increased to £138,750 if you are lucky enough to be buying a second home. This has had an impact on trading volumes. The £700m of Stamp Duty revenues expected as a result of the changes have, unfortunately for The Treasury, only realised £330m.
From the beginning of the year, the impending Brexit vote had triggered uncertainty in the UK housing market. The shock result ensured a “wait and see” attitude on the part of vendors for the remainder of the year as we dealt with the ensuing changes in leadership and the debates over the timing of triggering Article 50. This is one of the main factors that has led to the lowest levels of housing stock in North Yorkshire for over 30 years.
North Yorkshire 2016
Transaction volumes are always the key indicator as to the general health of a local market. In North Yorkshire, in January 2016, 701 houses sold. In February 2016, 737 houses changed hands. In March, prior to the stamp duty hike on second homes, this number surged to 1,319 and then in April the number of houses changing hands reduced to 632. Since April, the number of transactions has been gently increasing and the last data for the county shows an average of about 900 per month. Given the political and economic backdrop and the exceptionally low stock levels this was a surprisingly upbeat finish to 2016.
This time last year we predicted a 4% growth across the whole of the North Yorkshire region and this looks to have been a largely accurate prediction given The Nationwide statistics show a growth figure of 4.4% growth (entire North East region) for the year and the RICS shows 3.5% growth (North Yorkshire only) for the year.
The Search Partnership House Price Index
We have updated The Search Partnership House Price Index to summarise the changes in house prices in some of the popular regions of North Yorkshire for 2016 to give a detailed view on pricing in our key operating areas at local level. The Index focuses on the pounds per square foot of sales achieved during the calendar year by dividing the Land Registry sale price by the Gross Internal square footage of every detached house, in each of the 6 areas shown. No professional opinions or over optimistic suggestions, just hard facts.
12 months ago, the statistics showed that central Harrogate and Wetherby had been the star performers. This year, the statistics show a very different set of results. The more rural parts of the county, specifically the villages around Bedale showing the greatest rate of increase – 17.9%. The opening of the Bedale bypass is the most noticeable change in the area giving shorter journey times from these villages to the A1, resulting in a significant uplift in demand.
Predictions for 2017
The views of the usual pundits for 2017 include the Nationwide showing a 2% average growth across the UK, the RICS predicting a 3% rise, Price Waterhouse suggesting “between 2% and 5% growth” and Rightmove predicting a 2% increase over the calendar year.
Although the threat of rising inflation might get The Bank of England to consider interest rate rises, our view is that money is still cheap to borrow and that does not seem likely to change in the short term. Brexit has not brought the shock to the housing market that many predicted although we remain cautious about the reaction to the eventual triggering of Article 50. The remaining thorn in the side of the housing market is the issue of stamp duty; a stamp duty alteration would lead us to increase our optimism for 2017 but without any changes, we predict a growth of 3% in North Yorkshire over the next 12 months.