Future of the UK housing market | NatWest

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The future of the UK’s housing market

Find out where the UK's housing market could be heading

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We recently carried out a survey which revealed that over half (51%) of 20-45 year olds are currently looking to buy a house. So, we spoke to two independent experts to get their thoughts about the future of the UK’s housing market.

Property expert Henry Pryor, and Paula Higgins, the CEO of HomeOwners Alliance, have given us their thoughts on where the market’s heading – delving into four main areas: house prices, renting, Brexit and availability.

Read on to find out what their predictions could mean for you when planning to sell your house or buy your dream home, and what to consider as you plan for the future.

Will house prices rise or fall?

It’s no secret that house prices have increased a lot over the last 10 years. In fact, since 1997, they have gone up by 259%, with the average UK home now likely to cost £218,255. If you’re looking to buy in the North East – the most affordable region in the UK – you can expect to pay less, at around £123,781 for the average property.  


Looking at London and the South East specifically, Henry expects prices in these regions to “remain pretty buoyant” in the long term. This is similar to other predictions which suggest that annual house price changes could rise from 4% in 2018 to 6% the year after.


We asked Henry about these increases, and he believes that house price inflation in the short-term will actually “slow over the next six months and in due course turn negative.” Looking longer-term, house prices may “pick up again towards 2020 and be positive in five years’ time.”


With signs that house price increases are set to slow temporarily, Henry tells us that if you’re a potential buyer:


You need to be ready to move as soon as prices become affordable and the right property comes along.

So, how can renters prepare themselves to move onto the property ladder when the opportunity arises?

Moving from renting to owning

If you’re worried about how much you spend on rent each month, you’re not alone. A recent Government survey showed that 46% of 25–34 year olds are paying private landlords for accommodation. It’s estimated that these rent payments are taking up to 35% of a person’s income, compared to only 18% for homeowners who pay monthly mortgage payments instead – revealing one of the biggest potential benefits of getting onto the property ladder.


But Henry realises that “anyone considering buying a home will need to build up some savings.” Of course, this is “not always easy if you have to rent a property in the meantime,” so people can find it tricky to save for a deposit.


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Paula reassures us that careful budgeting and saving can help prospective homeowners get a step closer to buying their home. She explains that:  


Producing a household budget is underrated. It can seem a bit dull and it's not a quick solution but it's a great way of working out where you can cut back.

Henry adds that, if you’re in position to do so, you could also think about sharing a home with friends or moving back with your parents, and there are some jobs that will provide you with accommodation as part of your employment package.”


If you’re renting and looking to save for a deposit, the budgeting tips in our Manage Your Money guide could help you put away as much money as possible into your savings pot every month – to help you reach your deposit goal quicker.

The Brexit effect

Even for the savviest savers, the UK’s vote to leave the EU has created some uncertainty – with our survey showing that 82% of people feel that Brexit won’t have a positive impact on their ability to get on the property ladder. But Paula thinks that this “uncertainty surrounding Brexit could have a cooling effect on house prices,” and so “in that sense it could make things a little easier” for first time buyers.


Henry adds that “investing successfully in property is still possible, even as we head towards Brexit.” People shouldn’t necessarily be put off property investment, but may need to bear in mind that making money could require more effort. Henry suggests that those interested in investing should:  


Look at what estate agents, newspapers and TV shows tell you that the market wants, research it to make sure, and then find a suitable property to do up or to convert.

2017’s general election 

As well as the Brexit result, it was announced there will be a snap general election on 8th June. Henry explains that “no market likes uncertainty and the housing market is no different.” So with the Scottish Independence Referendum in 2014, the General Election in 2015, the Brexit Referendum in 2016 and another General Election in June, it looks like the uncertainty around the UK’s housing market may be here to stay for a while longer.


Henry says that one outcome of this uncertainty is that we can expect that prices may be volatile. But be confident, that if selling, there will still be people that want to buy. And if you’re thinking of buying then you may find that this is one of the best years to grab yourself a bargain.

The impact of availability

Although Brexit may mean house prices are squeezed, decreased housing availability could actually have the opposite effect.


The Government’s plans to build a million new homes by May 2020 to try to tackle the UK’s housing shortage was pushed back in January 2017. Paula thinks that the “lack of housing supply will mean demand for properties will continue to be strong and this could help keep prices rising, or at the very least stable.”


If price increases do speed up instead of slow down, this could be good news for those wanting to sell their house. For people looking to buy, Henry tells us:

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There’s a number of Government initiatives to help people into home ownership and on to the property ladder. First time buyers should check out the Help to Buy schemes.

This continued support from the Government could make it easier for those buying their first house – especially if property prices do carry on rising.

How can we prepare for future changes?

We know that these changes could have different effects on current and prospective homeowners.

So, whether you’re hoping to get on the property ladder or looking to sell your home, you can use our guides and tools to help prepare you for every step.

We’ve asked our experts to share some final words of wisdom to help you plan for the future: 


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Remember that you make money in property not when you sell but when you buy. It's worth noting that there is no ‘fixed’ price, you can and should negotiate... the buyer decides what a property is worth. It’s the seller’s prerogative to decide if it’s enough to persuade them to sell.

Henry Pryor, property expert and market commentator  

Be informed

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As clichéd as it may sound, knowledge is power. Know your rights and where you can turn to if something doesn’t seem right. Don’t take everything the estate agent says as gospel. Understand the market and get as much information on buying as possible before you start your search.

Paula Higgins, CEO, HomeOwners Alliance 

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