As we teeter on the edge of 2018, how about a bit of crystal ball gazing to see if we can predict what the Bath property market could do in 2018? Whilst we’ve been working over the Christmas period, we’ve been having quite a few conversations with present and future owners with this question at the top of the agenda and I’ve also been reading through a lot of the opinion pieces already published on national channels. Let’s start with a few headlines and soundbites from the heavy hitters in the industry before focussing on the local market;
“Price rises to remain muted in 2018” – Knight Frank
“GB house price growth to slow to 1% in 2018” – Countrywide
“Annual house price growth to stay low & in the range of 0% – 3% by the end of 2018” – Halifax
“House prices remain broadly flat at the national level” – RICS November 2017 survey
Apart from the continued uncertainty surrounding Brexit, there are other property related factors bound to influence the market in 2018. November’s interest rate rise may well be followed by two more over the next three years, according to the Bank of England’s own forecasts. First time buyers received a bit of a bonus in the Chancellors Autumn Budget as regards SDLT – will this have an impact on demand from this buyer grouping or simply increase prices as sellers factor in the benefit to their prices?
Investment buyers have already taken a hit in the last year with extra SDLT but there’s more to come – apart from the acceleration of Build to Rent schemes across the country competing with more traditional BTL stock, the effects of restricted relief on mortgage interest will start to be felt by landlords from April 2018 onwards and then really kick in for the 2018/19 tax year. Energy Efficiency standards also come into effect in this year for let property.
So, before using our crystal ball, how did the housing market in Bath perform in 2017? Our 2017 roundup article will give you all the detailed data but the most recent Acadata figures would suggest a 6.3% price increase in BANES from Sep 2016 to Sep 2017 whereas the Office of National Statistics suggest a 5.8% price increase in BANES from Oct 2016 to Oct 2017 and an average house price of £333,157.
However, the ONS report also highlights a significant drop in sales volumes across BANES – 14.8% down from Aug 2016 to Aug 2017.
In terms of supply levels, it looks like we might enter 2018 with a much higher number of available properties than in previous years. Our collected Rightmove data over the last four years is as follows
January 2018 – 540 available properties in Bath
January 2017 – 395
January 2016 – 303
January 2015 – 423
However, unlike some of the previous years, the 2018 figure does include 118 new homes and 54 retirement homes with several large housing developments currently underway in the city (Western Riverside, Ensleigh, Holburne Park and Mulberry Park in the main).
On the subject of new homes, the lack of appropriate new building across Bath has been a bone of contention for many years. It has been more than a decade and a half since the last large development in the city with mass market affordable homes (Sulis Meadows) and the majority of current building is simply far too expensive for the greater proportion of the public to entertain. Any new properties required by planning constraints to be “affordable” seem to be shared ownership whereas what the city market really needs is a decent lump of 2 bed starter houses to cater for young professionals starting out (and to enable downsizers to release much needed larger family homes onto the market).
Crystal ball time and, as a quick summary, here’s our latest article to be published in early 2018 for InBath;
“The second half of 2017 in the Bath property market saw a continued gradual price growth across the board but also a long awaited rise in in supply levels of available properties from a low mid year point (14% up May to Nov ). Average selling times became marginally slower up to November, as is often typical for the approach to winter. The average number of price reductions also increased (in November, Rightmove suggested 37% of properties on its site had been reduced at least once) and the Bath apartment market showed the least movement in sale terms with an 8% increase in available properties vs other property types. The 2017 autumn RICS survey data anticipates most regions displaying a flat to negative trend over the next three to twelve months but there will of course be significant variations even within regions and the Bath market has often outperformed regional averages, due in part to its relative size vs desirability but also the strong rental market and commuting links to London.
From a hyperlocal viewpoint, our 2017 experience was that correctly priced properties in the low to mid range Bath market sold strongly and quickly – often with multiple interested parties – and we would expect this to continue into the New Year. The average viewing to offer ratio remained around the expected 10 – 1 and early seller entrants to the 2018 market should receive a great deal of activity. Particularly active markets for us right the way through to Christmas included HMO investments, BA2 family homes and Victorian terraces. Despite recent building in the city, there remains an unfortunate gap in supply of affordable houses for first time buyers and also appropriate homes for upsizing local families. Villages and towns to the south will therefore continue to attract a great deal of relocators.
As to crystal ball advice for selling in 2018, correct pricing and broad marketing remain the keys to your success as a seller. Focus on achieving the best price from the best buyer – its not always the first person or even sometimes the highest offer. Take time to do your research on sale values, agent capabilities and also set up a framework of professional advisers (solicitor, mortgage broker, surveyor etc) before putting your property on the market. If you’re realistic and prepared, you’ll always see the rewards in speed of sale and the success rate of the transaction. “
Happy New Year from all of us at Madison Oakley!