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House prices – up or down?
The Central London property market has been negatively impacted by the Referendum result with many properties remaining unsold despite price reductions. Nervousness and uncertainties about the future of jobs and bonuses particularly in City financial institutions has introduced something of a freeze on the market. This is only likely to change once the dust has settled and people regain confidence that they will still have a job and income levels start to rise again. In the meantime, many potential buyers are sitting on their hands waiting for the bargains they expect to find in a falling market.
Outside London – Two Sides of the Coin
A mixed message!
Taylor Wimpey this week reported that it had seen no “meaningful change to date” in its house sales, with trading last month at a normal range. The update came as Taylor Wimpey reported an increase of 9% in operating profits in the first six months of its trading year.
It would appear that outside of the Central London market customers have stopped talking about Brexit in the context of buying a house. Taylor Wimpey Chief executive Pete Redfern confirmed “If you are on one of our sites in Glasgow or Exeter or wherever it (Brexit) just doesn’t seem to come up as a conversation. After the first week it quickly dried up.”
An initial increase of customers pulling out of deals in the immediate aftermath of the surprise vote on 23rd June quickly ended and sales are now back to normal. Although it is worth bearing in mind that because 40% of Taylor Wimpey’s sales are to first time buyers who can have access to the government’s Help to Buy scheme, their outlook is perhaps better than those sectors of the market exposed to relying on re-sellers in the housing market.
Rightmove are another organisation with a positive outlook about the post Brexit property market.
Britain’s biggest property portal said this week that it did not expect to see a Brexit induced slowdown in its business despite worries about the housing market. Posting a 16% rise in revenue in its first half results Rightmove said that trading in the month after he referendum was “in line with the strong monthly revenue achieved in the first half of the year.”
On the other side of the coin a new report from Reallymoving.com indicates that there has been a significant fall in residential property transactions across the UK which has had an adverse impact on home prices which have also fallen since the outcome of the EU vote.
The report which analysed activity among 35,000 people who registered for quotes for conveyancing, surveys and removals in the four weeks before and after the Brexit referendum found that overall, both property prices and transaction volumes fell by around 8% on a seasonally adjusted basis, with London, the Home Counties and Northern Ireland hardest hit.
The analysis of the UK property market shows that transaction volumes have fallen markedly, down 12% for the month post-Brexit compared to the month before. Although some summer seasonal decline is expected, typically around 4-5%, this is a seasonally adjusted 8% fall which is an unusually high volume drop.
Average property prices have also fallen sharply, down by around 8% – the largest month-on-month fall for more than five years.
Looking at the breakdown in prices and transaction volumes across the UK reveals striking regional differences. While London remains by far the highest priced region, prices have supposedly fallen 12% since Brexit, and property purchases down 44%.
The number of property purchases has fallen in all regions, led by London, the Home Counties and Northern Ireland, while Wales saw a drop of just 3%.
Although prices fell significantly in London, the data, which given its smallish sample should be treated cautiouslyr, revealed that there were even bigger declines in the North East of England and Northern Ireland; both fell 17%. But prices rose by 15% in Scotland and by a more modest 7% in Wales.
Trying to make sense of the comparison between the positive news from both Rightmove and Taylor Wimpey and the conversely gloomy report from Reallymoving.com is not easy.
Many property professionals remain cautious about the short term given the continuing doom and gloom from economists about the immediate future of the economy. Many Estate Agents are reporting a slow market with properties taking longer to sell and a down turn in the number of properties coming to market.
Although confidence remains high in the long term there are likely to be more ups and downs over the next few months as the impact of leaving the EU becomes a reality and the consequences become more apparent.