The number of buyers registering with estate agents rose 12% in December to 386 per branch according to the National Association of Estate Agents (NAEA). By comparison the average branch has just 41 properties on its books creating a tight supply-demand picture that bodes well for property prices this year.
The latest house price data published by Nationwide yesterday already shows that property prices rose 0.2% month-on-month and 4.3% year-on-year in January. This trend looks set to continue after the cut in the Bank of England base rate last year, which has led to lower mortgage rates.
The UK economy has been much more resilient that many economists were predicting after the EU referendum. The Bank of England raised its 2017 GDP forecast from 0.8% to 1.4% in November on the back of a stronger economy, and another increase in its forecasts looks likely given the positive outlook. A gradual rise in inflation also seems inevitable given sterling’s drop last year.
At Bardens Estates we continue to be positive on the outlook for property prices this year. We believe that consensus forecasts will turn out to be too conservative given the strength of the economy, rising inflation, cheap mortgage rates and rising buyer demand. When coupled with a shortage of houses on the market for sale, even our optimistic expectations may turn out to be too low.