Brexit doom and gloom for UK housing market failing to materialise
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.