After getting all of 2016’s big calls spectacularly wrong, I’m not too confident about predicting what will happen this year. Nevertheless, here goes:
1. The unravelling of London’s prime property boom will begin to slow. After several years of rapid growth, house prices in some parts of central London finished 2016 more than 10 per cent down on where they were in 2015. Unless Brexit negotiations have any more significant shocks in store — and let’s face it, they might — I think negative price growth in prime central London will begin to level off because a) the weaker pound makes homes look cheap to foreign investors and b) ultra-low interest rates show no sign of increase, and so property will still be an attractive tool for capital preservation. I think the picture is murkier for the thousands of glossy new-build apartments that are about to come to market. Those flats are at very high price points already and, while low interest rates can increase buy-to-let investors’ yields, recent stamp duty and tax changes have no doubt reduced incentives.
2. In North America, entrepreneurial cities with active and versatile tech centres will continue to grow albeit modestly. House prices in San Francisco and Vancouver might be reaching — or have reached — their peak, but I think the value of prime homes in Austin, Seattle and Portland will increase further, and probably outperform megacities such as New York and LA.
3. China has dominated house price indices in 2016 — with Nanjing and Shanghai reporting Q3 to Q3 rises of about 40 per cent. I think new government regulations will probably temper the growth and we won’t see anything like those numbers at the end of 2017.
4. Most big European cities experienced moderate price drops in 2016. Oslo bucked the trend, as did Berlin, and as that city shifts towards having more buyers (and fewer renters), there might be opportunities for modest growth.
5. But really, all bets are off. Since the financial crisis of 2008, growth in prime property markets has been facilitated by international capital flows. As western democracies seem ready to embrace protectionist policies, disruptions to the free movement of capital could seriously destabilise global property markets.
Nathan Brooker is a property writer for FT House & Home
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Photograph: Charlie Bibby