The market allows us cautious optimism for the year ahead

DURING 2016, prime housing markets across the UK in locations such as the Cotswolds have faced a number of headwinds, with high rates of stamp duty chief among them.

The increased rate on additional properties came into force in March of this year.

With over 19 per cent of second hand residential sales completed by Savills in Cirencester during 2015 falling into the ‘investment’ or ‘second home’ categories, we expected the impact to be significant.

Prior to the new rate coming into force, we saw a rush to market with buyers determined to complete before the deadline.

UK sales turnover recorded a new peak performance during this time: the previous record was June 2007, before the financial crash.

The months which followed showed a significant fall in activity among these groups.

Next came the referendum to leave the European Union.

Brexit, and the political uncertainty it brings, came as a shock which reverberated across the markets.

Whilst its impact is not comparable to the events of the late summer of 2007, sentiment and confidence suffered as a result, particularly across London.

The local country house market is to some extent reliant on buyers from the South East so we witnessed the knock on effect of this over the summer months, particularly at the top end.

However, as autumn has turned to winter, we have seen the market adjust and begin to gain momentum once again, with London already recovering well.

We expect London’s position as a major global financial centre to be of paramount importance in any negotiations with the EU.

Interest rates are expected to remain lower for longer.

The weakness of sterling presents an (albeit limited) buying opportunity for international investors.

Each and every one of these drivers is likely to shape our markets over the medium term, though against the backdrop of a less accommodating tax environment.

All is not lost.

In fact, looking at the year as whole, (despite its ups and downs), the volume and value of transactions suggests a strong and stable market.

With limited stock and ongoing competition for property priced under £1million in particular, we are optimistic about the year ahead.

In the longer term, the outlook remains bright.

Savills Research forecasts price growth 17 per cent in the prime markets across the wider South of England over the next five years.

The Cotswolds continues to grow in popularity as a destination to live and to invest in property.

As such, values in the most desirable areas outperform neighbouring regional markets and I have no doubt that this will continue into the years ahead.