With all eyes now on a chaotic and unpredictable Brexit, the housing market remains surprisingly robust. Nationwide still expects house prices to rise by 1% this year and, although the London market is seeing some price reductions, they are relatively minor and there are signs of life in the previously challenging central areas.
There is no doubt, however, that Brexit is damaging consumer confidence and that is not good news for the wider economy. GfK, one of the world’s leading market research companies’ index shows confidence levels dropped 2 points to minus 9 in September.
That’s still a higher level than it has been for most of the last decade, but has dropped from plus 4 in 2016, just before the EU referendum. As with any negotiations of this kind, it all seems to happen as the deadline looms, which can produce some unsettling headlines, making people behave more cautiously as they fret about the outcome.
We should have a clearer picture by March, when we are due to leave the EU. Even if the final deal is not what we may have wanted, it could well trigger the release of a good deal of pent up demand and activity, as we will finally know what we are dealing with. It could be especially good for the housing market as it will come during the traditionally strong spring period. A hard Brexit, on the other hand, is likely to produce some short term challenges and prolong the general uncertainty as we try and work out exactly what it would entail.
In the meantime, Rightmove report a 0.7% rise in asking prices in September. Annual growth remains at a subdued 1.2%. There is still a clear north/south divide, with the best performing areas to the north of the country – the East Midlands (+4.7%), Wales (4.6%), West Midlands (+4.5%) and Yorkshire & the Humber (+4.0%). London, on the other hand, has dropped by 0.5% over the same 12 month period. There are signs, though, of a recovery at the upper end of the market – the number of sales agreed above £750,000 in September was up by 6.0% compared to September last year, while below £750,000 sales were down by 3.6%.
Autumn is traditionally a busy period for house sales and this year it should get a boost from a reported 16% jump in new properties coming to the market, providing plenty of choice for potential buyers.
Miles Shipside, Rightmove director and housing market analyst comments:
“The start of the ‘back to school’ season sees a surge of sellers coming to market compared to the preceding quieter holiday period. Sellers aren’t hanging back in coming forward to try and sell, and with average prices just 1.2% higher than a year ago, many seem to be pricing sensibly.”
In other news, it’s conference time and the Conservatives have announced that they will be increasing Stamp Duty for buyers who are not UK residents. There will be an initial 1% rise, with the possibility it might go up by 3% at a later date. Research shows 13% of London’s new homes are bought by overseas buyers, who are accused of pushing up house prices, especially for first time buyers.
Research from King’s College London clearly shows the effect they are having – a 1% increase in the number of homes sold to foreign companies pushes up prices by 2.1%. It may not be such good news for developers and their shares have already taken a hit since the move was announced.
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