Could it be that confidence is returning to the property market? CHARLOTTE ASHE, conveyancing executive with Rogers & Norton, is seeing some good signs
AS WE approach the end of the year, it would be something of an understatement to say that 2016 has been unprecedented in its news events. We have seen Team GB break records at the Rio Olympics, Tim Peake return home after six months in space, The Queen turn 90 and The Great British Bake Off move to Channel Four. It has certainly been a rollercoaster of a year.
Undoubtedly, however, the story that has continued to dominate the press during 2016 is the ground-breaking result of the EU Referendum. On June 24, Westminster, Britain, Europe and indeed the world were left in shock as we awoke to the momentous decision that Britain had voted “leave”.
Following the result, the subsequent resignation of David Cameron, the political instability that ensued and the Bank of England’s decision to cut interest rates, the impact Brexit would have was at the forefront of everyone’s minds. The initial predictions for the future of the UK’s markets, in particular the housing market, looked bleak. Headlines prophesised house prices collapsing, a dramatic fall in transaction levels and a reduction in affordable housing. The message was clear, the property market was heading for catastrophe!
Four months on and the dust has settled. While the divorce proceedings have not yet formally begun, the grave predictions made in the wake of June’s referendum decision have thankfully not materialised.
The National Association of Estate Agents reported a 16pc month on month rise in demand for properties in September 2016, bringing a return to the levels seen in June prior to the Brexit decision – this is in addition to a rise in the number of recorded sales. They also state just one in 10 estate agents has seen sales fall since Brexit, whereas two in five have witnessed no change in activity at all. The Royal Institute of Chartered Surveyors has also reported an increase in the number of new buyers during September.
Mortgage approval rates rose in September which, although lower than approval rates 12 months ago, goes further to suggest the increased stability of our housing market in recent months.
House builder Persimmon has reported its private sales rate in the period was 19pc ahead of last year and that the firm is “fully sold up” for the current year. We have also seen growth in the UK construction industry hit a seven-month high in September.
What this clearly demonstrates is that Britain is bouncing back and confidence levels are returning following initial anxiety. A report by market analysts IHS Markit found almost three-quarters of British homeowners are confident that the value of their property will increase in the next year.
While there is still a way to go until Britain’s exit from the EU is complete, the signs do indicate that although the housing market is likely to be subdued over the next two or three years, growth will continue before rebounding fully by 2020. We can expect many more Brexit dominated headlines during 2017 as Article 50 is triggered and negotiations begin, but if the property market can continue to demonstrate the stability shown during the summer, the outlook for homeowners will be far less bleak than first feared.