courtesy from http://home.bt.com/
The Housing Market
March saw a huge spike in activity within the housing market. The number of homes sold hit 162,000, 62,000 more than would have been expected without the Stamp Duty deadline (source: Council of Mortgage Lenders). Now that the deadline has passed. as predicted, growth is slowing.
Interestingly, Rightmove’s figures suggest it was first time buyers who took advantage of the increased demand in order to trade up, rather than landlords leaving the sector. As a result, upward price pressure has now shifted from one and two bed flats to second-stepper properties.
Asking prices for typical first time buyer properties fell by 1.4% in April, whereas prices for 3 and 4 bedroom houses rose by 0.6%. Of all the regions, London saw the lowest levels of growth at 0.3% with the boroughs furthest from the centre performing the best. In contrast, in the North East and the South East, prices were up by 2.0% (source: Rightmove).
Moving forward, the possibility of a Brexit may have an increasing effect on the housing market. Much like an election, the uncertainty created by the outcome of the referendum is likely to make buyers behave more cautiously than usual, especially with the press focusing ever more closely on the issue as we approach the 23rd of June.
If we decide to remain the EU, we should then see another spike of activity shortly afterwards, as pent up demand is released. But, if we vote to leave, it may take longer for the market to get back to normal as we assess the impact of the many changes it would bring about. One outcome the experts seem to agree on is that a Brexit is likely to lead to higher borrowing costs in the short term because the pound is likely to be targeted by currency speculators.
To defend it, the government may have to raise interest rates. Adding to the uncertainty, opinion polls are currently showing no clear majority for either the ‘in’ or the ‘out’ camp and, with confidence in the economy down from recent highs, the market may well become more price sensitive over the next couple of months.
In other news. Nationwide recently announced that, from July, they will raise their age limit for mortgages to 85 and Halifax announced they were their one to 80. Previously, many older borrowers had been forced into repayment deals over relatively short time periods, which had a significant impact on their monthly outgoings.
This new approach will provide far greater flexibility at a time when people are retiring far later in life than they have done in the past. It will also provide older borrowers with considerably more spending power and could have a significant impact on activity and prices at the upper end of the property ladder.