With Southampton annual property values 4.4% higher, here is my 2018 forecast…

Looking at the newspapers between Christmas and New Year, it seemed that this year’s sport in the column inches was to predict the future of the British housing market. So following the same theme, here are my thoughts on the Southampton property market.

With the average 5-year fixed rate mortgage at 1.98% (down from 3.47% in 2014) and 2-year fixed rate at 1.47% (down from 2.37% in 2014), mortgage interest rates offered by lenders are at an all-time low, and that’s even with the slight increase on the Bank of England base rate a few months ago. Added to this, there has been a low unemployment rate of 4.7% in Southampton, which has contributed to maintaining a decent level of demand for property in Southampton in 2017. Interestingly, an impressive 5,328 Southampton properties were sold in last 12 months, whilst finally, the number of properties for sale in the city has remained limited, thus providing support for Southampton house prices, meaning…

Southampton property values are 4.4% higher than a year ago

However, as continue into 2018, there will be greater pressures on people’s incomes, as inflation starts to eat into real wage packet growth, which will in turn wield a snowballing strain on consumer confidence. Interestingly though, information from the website ‘Rightmove’ suggests that over a third of the properties it had on its books in October and November had their asking prices reduced - the highest percentage of asking price reductions in the same time frame[CA1] , for over five years. Still, a lot of that could have been house-sellers being overly optimistic with their initial pricing.

In terms of what will happen to Southampton property values in the next 12 months, a lot will be dependent upon the type of Brexit we have and the impact on the whole of the UK economy. A lot of people will talk about the Central London property market in the coming year, and if the banking and finance sectors are negatively affected with a poor Brexit deal, then the London market is likely to see more of an impact.

Nevertheless, Southampton homeowners and Southampton Landlords should be aware of what happens in the rollercoaster housing market of Central London, but not panic if prices there drop suddenly during 2018. Over the last 8 years the Central London property market has been in a world of its own (Central London house prices have grown by 89.6%, whilst in Southampton, they have only risen by 36.4%). So we might see a heavy correction in the Capital, whilst more locally, something a little more subdued.  

Hindsight is always easier than foresight and predicting anything economic is all well and good when you know what is around the corner. At least we have the Brexit divorce settlement sorted and, as the UK economy and the UK housing market are intertwined, it all depends on how the country deals with the Brexit issue. Having been through the global financial crisis and come out reasonably intact, I am sure we can get through this together as well!

Oh, and house prices in Southampton over the next 12 months? I believe they will end up between 0.2% and 1.5% higher, although it will probably be a bumpy ride to get to those sorts of figures.

If you would like to read more articles on my thoughts on the Southampton property Market – please visit the Southampton Property Market Blog

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