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What we expect to see in 2018

5th January 2018

Categories: Latest News

Well, a few weeks into the New Year, with the season of mince pies, Christmas pudding and turkey but a distance memory, I thought I would take a look at some things we might expect to see 2018.

Interest rates will remain low

Another interest rate rise is expected in late spring, probably 0.25% taking the Bank of England base rate to 0.75%. However, with more than 50% of all borrowers on fixed rates, it will probably go unnoticed by most homeowners.  The economy is likely to remain weak through the year and therefore I would not expect any further hikes in 2018. Mortgages will probably remain cheap although, with inflation outpacing wage rises, will still very much feel like a burden.

Housing Market

The recent housing announcements in the November budget should have a positive impact on market activity in 2018. The reported upturn in housing activity in the latter stages of 2017 is expected to continue. First-time buyers were the obvious winners from the budget boosted at the lower end of the market thanks to the stamp duty cut.   This, in turn, should lead to higher transaction volumes further up the ladder, as second, third and fourth steppers look to trade up and elderly homeowners look to downsize.  Depending on where one obtains information house prices are also expected to rise, albeit at a slow rate.  This is driven fundamentally by the lack of supply lagging behind ever-increasing demand.

A stalling Brexit

The process of withdrawing from the EU will continue throughout the year and will no doubt remain complicated, arduous and frustrating. The endless uncertainty and speculation helps no-one, but breaking from a union we entered in the 1970’s was never going to be easy.  I would hazard a guess that the likelihood of a deal being delivered that is agreed, ratified and implemented by April 2019 is fairly low.

I am often asked what has been the impact of Brexit on the property market.  Well, talk of house price crashes have died down as the industry has got to grips with the new normal.

Uncertainty isn’t ideal, and I suspect the impact on the housing sector will largely depend on the actual outcome of negotiations with the EU.  A shortage of affordable housing is a much bigger problem.

Regulatory changes

There are a number of significant changes coming up in not least the introduction of MEES (Minimum Energy Efficiency Standards).  In short, from the 1 April 2018, landlords of commercial property will be prohibited from granting new leases of property with an Energy Performance Certificate (EPC) rating of either F or G.

The other main legislative change coming in and will apply from 25 May 2018 is the EU’S General Data Protection Regulation (GDPR).  This will strengthen existing data protection legislation and will apply to all ‘Controllers’ and ‘Processors’ of data.  Fundamentally once the legislation comes into force controllers must ensure personal data is processed lawfully, transparently, and for a specific purpose.

The growth of Artificial Intelligence (AI)

2018 is unlikely to be the year where AI starts playing an integral role in the property market the recent Budget showed the government is taking AI seriously.   The government will set aside £75 million to support start-ups and create an AI advisory board to look at ways of breaking down the barriers to AI development.

Currently, Britain is lagging well behind world leaders in AI such as China, Korea, Taiwan and Japan who are responsible for 70% of all AI technological development.  It is clear the government is determined to stop the country from being left behind by the competition in the tech revolution.    

So, an interesting year ahead for all of us. Let’s see how things go in 2018.

Paul Palmer is the TDA Estates Manager and can be contacted on paul.palmer@tedcltd.com

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