Economic and Political Uncertainty Predicted to Affect Property Returns in 2017

Given everything that happened during 2016, it was a very strong year for property – something that came as a surprise to many people. The value of the average house increased by 6.5% over the course of the year and although that figure is lower compared to the previous year, it’s still impressive all things considered.

Many people had predicted a poor year for property at the start of 2016 and after the British public voted to leave the EU in June, that feeling only strengthened. It was expected that many of the wealthier people who live in the capital would move and create a trickle-down effect that would negatively impact the entire property market but that did not happen.

Despite 2016 being a strong year for property, many experts predict that 2017 could be quite different. Halifax’s housing economist, Martin Ellis, had the following to say –

“Slower economic growth, pressure on employment and a squeeze on spending power, together with affordability constraints, are expected to reduce housing demand during 2017.

“UK house prices should, however, continue to be supported by an ongoing shortage of property for sale, low levels of housebuilding, and exceptionally low interest rates.

“Overall, annual house price growth nationally is most likely expected to slow to between one and four per cent by the end of 2017. The relatively wide range for the forecast reflects the higher than normal degree of uncertainty regarding the prospects for the UK economy this year.”

An article from The Telegraph also demonstrates how property returns are likely to be lower in 2017 compared to the previous couple of years. The lower returns won’t affect all sectors, with industrial property predicted to perform well, not least because of the needs of mega retailers such as Amazon, who continue to expand their operation.

Agricultural property could easily take a hit in 2017 however, as the full effects of Brexit on the farming industry are yet to be seen.