How Will Starting Brexit Negotiations Affect the Housing Market?

How Will Starting Brexit Negotiations Affect the Housing Market?

How Will Starting Brexit Negotiations Affect the Housing Market? The UK property market will not see any sharp decline because of the formal start of the Brexit Negotiations. During the 2 year period, the UK will negotiate trade deals. May will look to secure deals to benefit the economy once they are not a member of the European Union. The economy is predicted to slow and the property market could benefit from this; because investors look to add low tangible assets which to safeguard their portfolios. Industry experts point out that even during the time of uncertainty following the EU referendum last June, UK house prices have been steadily rising since the vote in June last year and have remained broadly stable across the country. The slight retractions in the London market attributed to the 3% stamp duty surcharge.

Strong Demand For homes & limited supply will outweigh any uncertainty

The London market remains impervious; with such a shortage of stock, the overwhelming level of housing demand will hedge any depleted buyer interest. Despite the uncertainty in the market, property values have continued to show signs of positive growth in 2017. This will only strengthen as time goes on. The cooling price growth the last 18 months has been influenced more by the stamp duty changes than Brexit; which has unquestionably paid a considerable role in impacting the market. With initial Brexit fears starting to subside and property values continuing to increase on both a monthly and annual basis; investors should be assured that the market remains one of the most resilient in the world. Shortage of Housing Supply The housing supply shortage is so severe, that property prices are set to rise for the next 50 years, continuing to outstrip incomes, warns ex-Bank of England economist. Professor David Miles, a former member of the Bank of England’s monetary policy committee, says the shortage of housing and a restriction on the availability of land in the UK will mean house prices keep spiraling upwards for decades to come. Read Full Article Here: Robert Nichols, Managing Director of Portico, says if the Pound weakens this could fuel demand from overseas buyers.

UK Market Confidence remains strong

The confidence in UK markets remains high. Echoed by the recent announcement by Qatar’s finance minister; saying the Qatar Investment Authority (QIA) is pledging an additional 5 billion pounds ($6.3 billion) of investment in Britain over the next 3-5 years. This comes as a significant show of support and confidence for the UK’s economy. The announcement came just two days before Prime Minister Theresa May triggers formal Brexit talks. The Qatari Prime Minister, Sheikh Abdullah bin Nasser bin Khalifa Al Thani said; “Qatar has great confidence in the UK, and this confidence will be demonstrated in the additional investments we will make over the next decade.”

Asking Prices Rise in March

Asking price data from Rightmove for March 2017indicates that Brexit Negotiations will not drastically affect the housing market.  This indicates that the UK housing market remains resilient. Across England and Wales asking prices rose by 1.3%, or £3,877 in February 2017;  equal to the jump seen in March 2016, caused by a rush to beat tax rise on stamp duty.

The number of house sales will rise across the UK.

Data from National Association of Estate Agents (NAEA) reveals Monthly  sales transactions reached a 10 year high in February 2017. This indicates that Brexit is having little impact on sentiment in the UK property market. The NAEA data, indicated volume of transactions in a month increased to 11 per branch. The last time this figure surpassed 10 per branch was in September 2007.

Slow Growth could balance affordability

Slowing price growth could be good news for first time buyers who have experienced city homes become the least affordable since 2008, with property inflation far higher than wage inflation. The slow-down will be welcome by some buyers, especially in Oxford; the UK’s least affordable city where property values are almost 11 times the annual average wage. The National Housing Federation (NHF) has reported that there was now only one town in England where a low-paid worker could afford a mortgage. Burnley in Lancashire was the only place that a nursery nurse, for example, could afford to buy a home. House prices in England had risen by 120% between 2002 and 2016, the NHF said. This is a staggering amount considering salaries had risen by just 38% over the same period.

Was Former Chancellor George Osbourne wrong when he suggested prices would dramatically fall if the UK voted leave?

Fionnuala Earley, chief economist of Countrywide, highlighted that the early expectation that property prices would fall dramatically if the UK voted to leave the UK were wrong. ‘House prices are still rising across the UK and continue to grow in London, which is arguably more sensitive to Brexit. But, over the medium term, it’s the effect of the outcome of negotiations on the UK’s economic performance, particularly jobs that will determine the effect on housing market prices and activity,’ she said.

What Regions are performing well?

Manchester has the fastest rising property prices in the UK recording a growth rate of 8.8 per cent, London slipped to tenth place with 5.6 per cent. Manchester had an 8.8 per cent annual price growth on the back of a more than 40 per cent surge in transactions in the last three years, according to the February 2017 Hometrack UK Cities House Price index. Liverpool saw 6.8 per cent annual growth year to February 2017, Birmingham recording 7.4 per cent growth, up from 5.5 the previous year. All seeing strong growth on the back of 30 per cent to 40 per cent surges in transaction volumes over the last three years. In the capital, meanwhile, house price inflation slowed to 5.6 per cent year-on-year, down from 12.8 per cent last year, as the number of sales fell by 8 per cent due to weakening investor demand, affordability pressures and uncertainty over Brexit. Read Full Article Here. The rental demand in Manchester has remained constant, and shown stable growth, annual rents rising 4% from £8,316 in 2014 to £8,628 in 2015, according to research by HSBC.