Nearly three months on the haze of uncertainty surrounding how Brexit will play out appears slightly less opaque than before, as consumers remain confident.
But just where are we now in terms of house prices, construction and mortgage finance?
Here’s a quick round-up from Paula Higgs, CEO of the HomeOwners Alliance on how things stand in mid-September 2016:
Housebuilding and construction
Some of the UK’s biggest housebuilders insist it’s all back to “business as usual” this month. That’s chiefly because long-term housing under-supply has meant that the hiccup following the uncertainty of Brexit was just that – a hiccup. The demand for housing throughout the UK remains unaffected.
Consumer confidence
Fewer houses were purchased both pre-Brexit and in its immediate aftermath, as potential buyers waited to see what effect the decision would have on house prices, employment and the economy at large. Sellers, fearful of this lack of interest, lowered prices in order to secure a sale. The ball has landed just inside the buyer’s court for the first time in years and it looks likely to remain there for some time.
Also, as predicted, the introduction of the three per cent Stamp Duty on second homes in April this year has played its part in curbing the enthusiasm (and finances) of many buy-to-let investors.
Finance lending
The Bank of England’s reduction of its base rate to 0.25% in August has meant mortgage rates are the lowest they’ve been for a number of years (it was 5.25% back in 2008 at the start of the Credit Crunch). This means it’s an extremely good time to remortgage. The biggest bargains are on the two, five and 10-year mortgages currently on the table.
First-time buyers may not feel quite so buoyant, however. That’s because the number of 95% mortgages has fallen considerably (although admittedly this began a couple of months pre-Brexit). According to Moneyfacts, lending on small deposit mortgages has fallen 3.5% compared to the same time last year.
House prices
Prices are similar to what they were before the Referendum, but the number of transactions continues to decline. But continued under-supply means they are expected to rise in the coming months, says the Royal Institution of Chartered Surveyors (Rics) – albeit at a much slower rate than at the beginning of the year. The member organisation predicts an increase of 3.3% per annum over the next five years. The cost of an average home in the UK in August was £213,930. This was an increase of 6.9% compared to the same period in 2015.
Prices in the upper regions of London housing continue to experience a drop while the rest of the city is expected to remain stable for some time (up to a year, according to some property analysts).
Impact of foreign investors
With the pound Sterling performing poorly in terms of the exchange rate, UK property – and that of London in particular – continues to remain extremely popular for foreign investors – especially those from China and the Middle East.
The focus of these Asian, American and European investors isn’t the same as it was this time last year though. They too are feeling the effects of the Stamp Duty charge on second homes to the extent it has encouraged many to lower their property price point. This means many overseas investors are proving strong competition for first time buyers from the UK, as well as existing property owners looking to move up the property ladder.
Conclusion
How will things work out for the property market as the Brexit juggernaut continues? It remains difficult to tell. From where things currently stand, there doesn’t look to be a lot of change and if there is, it may take time to filter through. Life does look to be a bit more comfortable if you’re a buyer than previously, especially with those impressive fixed rate mortgage deals out there at the moment. One thing is for sure, if you happen to have a house to buy or sell, there doesn’t seem any point in hanging around – unless you have a spare 2-3 years to see how things have worked out post-Brexit.
