“2016 was a challenging for the housing market, but it appears to have overcome these obstacles without experiencing significant instability. The changes to Stamp Duty Land Tax (SDLT) meant that a huge amount of transactions were brought forward into the first quarter, and it is therefore unsurprising to see that house price growth and mortgage lending was slower in the second half of the year as demand slowed. However, house prices are more than 7pc higher than they were a year ago, which illustrates the strong fundamentals underpinning the market.
“The picture for mortgage lending is more mixed. While there were increases on 2015 in almost every sector, many lenders are concerned about how successive regulations will affect buy-to-let lending, which forms a prominent part of many of their businesses. However, there is encouragement to be taken from lending to first-time buyers, which was 13% higher than in 2015, and shows that first-time buyers are still accessing the market in spite of stretched affordability.
“Looking ahead to 2017, buyers’ confidence is likely to grow as the economic picture becomes more stable, which should lead to an increase in activity and support further price growth. Investors will also become used to the regulatory ‘new normal’ and begin to factor policy changes into their planning, which will drive greater lending volumes in the buy-to-let market than we are currently seeing.
“In the long-term, demand for both rented and owner-occupied accommodation will support price prices and sales volumes. The government signalled a shift in its attitude towards tenure type in its housing white paper last week, and there is likely to be a greater emphasis on building a strong private rented sector.
“There will undoubtedly be challenges for the market over the next twelve months, with the triggering of Article 50 and changes to landlords’ tax relief looming on the large on the horizon. However, the property market has shown it is more than strong enough to overcome these obstacles.”