Where the property market headed next


Recent data has shown that while prices are still rising in the housing market, they are not rising as quickly as they were before. In the year to June, prices rose by an average of 9.7% but this has gone down in the year to July where they rose by 8.3% across the UK. The growth in London was still high at 12.3% while in the South-east, the growth was at 11.9%. In the east of England, they rose by 13.2%. Regional growth was slowest in Yorkshire and Humber where there was only a 4.7% growth.
Although this data seems to just confirm what has been witnessed in the past i.e. strong growth in the south and moderate growth elsewhere, this is the first batch of data released after Brexit. The treasury had warned that house prices could fall by as much as 10-18% if the UK left the EU but this is yet to happen. In fact, average house prices rose by £1000 in the UK. However, this growth wasn’t witnessed in all parts of the UK and Aberdeen, where prices dropped by 6.9%, was the worst performing area. Prices in this city have been rising and falling erratically with oil prices.
Although it seems like the UK property market has been able to evade the worst of what was predicted, some experts are saying it’s still too early to dismiss the impact of Brexit. Jonathan Hopper of Garrington Property Finders has pointed out that the fundamentals of the market are not as they should be with demand and supply both on the decline. This means that although prices are still rising, the number of sales is falling. He further states that while there are many buyers willing to buy, market uncertainties are now holding them back.
Yorkshire Building Society’s chief economist, Andrew McPhillips, stated that many people are postponing their plans to buy as they wait for a clearer picture of what’s coming and that the market could be erratic in the coming period as prices drop and buyers rush in to buy. Even in London, things aren’t as positive as the double digit growth shows. There has been a decline in prices at the higher end of the market and sales of £2m to £7m have fallen by 47% in the three months leading to July compared to 2015.
Borrowers are however much less optimistic according to the lending figures for July. Compared with June, lending to homeowners has gone down by 13% and the figure is even lower, 19%, among first-time buyers. The Council of Mortgage lenders, however, states that it’s difficult to state how much of this decline was due to Brexit and how much was just due to the continuation of conditions in a cooling market. They also added that it would take a while before this could be properly assessed. Remortgage activity was, however, 7% higher than June and fifth higher than it was a year back so it wasn’t all doom and gloom.

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