Brexit doom and gloom for UK hous­ing market fail­ing to ma­te­ri­alise

Financial Mirror (Cyprus) - - FRONT PAGE -

Peo­ple in the UK are still pos­i­tive about the hous­ing market de­spite the de­ci­sion by the coun­try to leave the Euro­pean Union, although they seem to agree with many ex­perts that price growth will be more mod­er­ate.

This is full of good news. It means that prop­erty is still re­garded as a good in­vest­ment and peo­ple still want to buy, as shown by two new pieces of re­search that came out last week. The UK is still a na­tion where peo­ple aspire to own a home and what is par­tic­u­larly in­ter­est­ing tis that those who might strug­gle with af­ford­abil­ity are will­ing to look at al­ter­na­tives such as shared owner ship.

The first pointer is the lat­est sen­ti­ment sur­vey which shows that there has been a sig­nif­i­cant uptick in house price sen­ti­ment since the vote to leave the EU. The Knight Frank HIS Markit in­dex was over 50 for a third month in row since its low point in July, just af­ter the ref­er­en­dum.

It was slightly lower than in Septem­ber and sig­nif­i­cantly be­low its peak of 63.2 recorded in May 2014, but as the in­dex re­port points out house­holds are still pos­i­tive about the market although ex­pect­ing more mod­est growth in prop­erty prices over the next 12 months than they were in Septem­ber,.

It comes at a time when house prices in many ar­eas are con­tin­u­ing up­ward, although price growth in Lon­don has slowed. The Home­track cities house price in­dex showed that 11 cities are see­ing higher growth than at the start of the year and nine slow­ing.

And re­search from the Coun­cil of Mort­gage Len­ders shows that the ma­jor­ity of Bri­tish peo­ple still want to own a home and they aspire to hav­ing their own prop­erty not purely for fi­nan­cial rea­sons. It found 72% of adults want to be home own­ers in two years’ time and 80% hope to own in ten years’ time.

It is in­ter­est­ing that the re­search gave us some in­sights into how peo­ple per­ceive home own­er­ship and how to help young peo­ple get onto the hous­ing lad­der. It found that par­tial home own­er­ship through shared own­er­ship or shared eq­uity is re­garded as a good idea by around half of all those who took part in the sur­vey, around five times the pro­por­tion who see it as a bad idea.

In­deed, more peo­ple see part own­er­ship as a step­ping stone to full own­er­ship than as a per­ma­nent ten­ure in its own right and in ad­di­tion, a ma­jor­ity of peo­ple re­gard­less of their own cir­cum­stances feel that it is harder than it has ever been for young peo­ple to buy their own home. If those who be­lieve it is very dif­fi­cult are in­cluded, the pro­por­tion rises to 85%.

Over­all, 75% be­lieve ac­tion is nec­es­sary to help first-time buy­ers. Pre­dom­i­nantly, peo­ple see the gov­ern­ment as hav­ing a re­spon­si­bil­ity, but mort­gage len­ders, house builders and lo­cal au­thor­i­ties are also widely re­garded as hav­ing a role.

It is cer­tainly a good time to be get­ting a mort­gage and the usual monthly fig­ures from the Coun­cil of Mort­gage Len­ders showed that home lend­ing market has not been de­flated by Brexit with gross mort­gage lend­ing reach­ing GBP 20.5 bil­lion in Septem­ber, the high­est Septem­ber lend­ing fig­ure recorded by the CML since 2007.

The CML is pre­dict­ing a mod­est rise in ap­provals, though at lev­els lower than seen ear­lier this year, as the lack of prop­er­ties on the market for sale and af­ford­abil­ity con­straints con­tinue to bear down on bor­row­ers. The re­port de­picts a mort­gage market un­de­terred by the EU ref­er­en­dum re­sult and very much open for busi­ness.

In­deed, the 11% in­crease in lend­ing between the sec­ond and third quar­ters shows that bor­row­ers weren’t put off by the down­side of Brexit be­ing hailed in the head­lines.

That we can have such pos­i­tiv­ity in the hous­ing market at a time of po­ten­tial eco­nomic tur­moil sug­gests that the preBrexit fears ought now to be put to bed.

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