Posts with tag: housing market

How will Brexit result affect the property market?

Published On: June 24, 2016 at 11:13 am

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Markets across the world have nosedived this morning, following the shock result that Britain is to leave the EU.

The pound is at its lowest level since 1985, following the narrow victory for the leave campaign in an historic outcome.

Shock result?

However, perhaps the result shouldn’t come as that much of a shock. Just yesterday, a poll of over 2,800 homeowners by PropertyPriceAdvice.co.uk gave Leave a substantial lead, of 49.1% to 41.5%.

PPA’s Peter Sherrard noted, ‘as predicted by PropertyPriceAdvice earlier this week, the UK has voted to leave the EU. This shock vote will have far reaching ramifications for the residential property market in the UK during the rest of year.’[1]

Housing market fears

With uncertainty rife, James Roberts of Knight Frank noted, ‘while we need to wait to see precisely what impact a Brexit will have on the UK housing market and wider economy, early indications are that the fall in the pound’s value, as well as the stock market, could very well lead to a new recession, which in turn may result in a cult in interest rates and possibly even further quantitative easing.’[1]

‘The chances of a technical recession, as business investment is curtailed, is high, and exporters and financial services firms will be in the forefront of the downturn. In the light of the above risks we expect the Bank of England, seasoned by the experience of Global Financial Crisis, to respond quickly. An interest rate cut of 25 basis points is a strong possibility at the Monetary Policy Committee’s July meeting, or perhaps earlier if required. We may also see a return of quantitative easing, if there are signs that investment is deteriorating. This should in our opinion help restore confidence as the summer progresses,’ Roberts added.[1]

Halts

Ian Westerling, managing director of Humberts, warns that, ‘housing market professionals will need to brace themselves for a new norm in market dynamics, underpinned by the ongoing unknowns. The wait and see period could lead to some price adjustments; the onus will be on the government to act swiftly to avoid the property market becoming paralysed which would have a knock-on impact on the rest of the economy.’[1]

Adam Challis, head of Residential Research at JLL, believes there will be a slowdown in the housing market for a couple of years.

He observed, ‘price growth will be flat over 2016, reversing gains from the first half of the year, while our central expectations of price falls between 3% and 5% in 2017 and 2018 are based on the best case scenario of a relatively orderly adjustment to our new political realities. It is crucial that UK politicians and civil servants push hard to regain transparency early on over the terms of our trading relationships with key European Union partners.’[1]

How will Brexit result affect the property market?

How will Brexit result affect the property market?

Opportunity knocks?

Britain’s decision to leave the EU has not ben widely condemned across the whole industry. The out vote could open doors for investors, particularly from overseas, to take advantage of the weak currency and potential house price drops.

Robin Paterson, joint chairman and CEO of UK Sotheby’s International Realty, urges people to embrace the result, ‘whole heartedly.’

‘This opens new opportunities for investment, we may have fewer European investors in the coming months but we believe there will be significant inward investment from Asia, as well as from the US. Buyers from these regions will undoubtedly be looking to snap up bricks and mortar in the UK with the predicted fall in sterling,’ Paterson said.[1]

Edward Heaton, founder and managing director of property buying and search agent Heaton and Partners, is also optimistic, saying, ‘there is a risk that with a period of uncertainty ahead of us, prices may drop off, but I believe that any fall will be limited and suggestions of a crash are overstated. The effect is most likely to be felt in London and the South East.’[1]

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2016/6/leave-win-historic-referendum

What Does Brexit Mean for the Housing Market?

Published On: June 24, 2016 at 9:27 am

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Categories: Property News

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The UK woke up this morning to the news that Britain has decided to leave the European Union. But what does Brexit mean for the housing market?

With a majority of 51.9%, the British public has voted to exit the EU. With the pound dropping to the lowest level since 1985, now could be a difficult time for the property sector.

What Does Brexit Mean for the Housing Market?

What Does Brexit Mean for the Housing Market?

So what do the experts think?

David Cox, the Managing Director of the Association of Residential Letting Agents (ARLA), and Mark Hayward, the Managing Director of the National Association of Estate Agents (NAEA), have issued a joint statement on the UK’s decision to leave the EU:

“The outcome of today’s EU referendum will create a period of uncertainty among homeowners, buyers, investors, landlords and developers. We can expect international investors to look a lot harder at the UK as a market; this will have a consequential impact upon the housebuilding sector, as investment may be stalled.

“In the short-term, we believe that both prices, and rents, will remain stable, but we cannot be certain about the next quarter, as political instability and market unrest could lead through into prices in the housing market. We believe that the UK housing market is resilient, as is the supply chain that drives it. But as we indicated in our Brexit report last month, the bigger impact may well be in the skills necessary to drive UK housing development, and this is now a major concern for UK buyers and renters.”

The CEO of estate agent Marsh & Parsons, David Brown, also comments on the result: “Whatever result you were hoping for on a personal level, it’s hard to argue against the fact that this result will bring further uncertainty, and also creates far more questions than it answers in terms of what happens next as Britain extricates itself from the continent in terms of procedures and processes. It’s also worth noting that if the pound weakens against the euro, as some have predicted, then it could lead to a significant increase in overseas property purchases – not bad news in itself, but unlikely to have been among the intentions of many leave voters.

“On the plus side, it makes the picture clearer for any individuals who were sitting on their hands, waiting on the outcome of the result to make their move. It’s also worth putting things into a wider perspective. Irregardless of the referendum result, there is still plenty of pent-up demand in the UK housing market, and a leave vote doesn’t change that overnight. When you think back to before the financial crisis, and the volume of transactions we were witnessing on an annual basis, there’s clearly scope for further improvement. The decision to leave doesn’t alter the fact that plenty of people have to and still want to move.”

Women visualise new property more than men

Published On: June 1, 2016 at 11:51 am

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Women are more instinctive than men when purchasing property, according to a new study by easyProperty.

The investigation, carried out in conjunction with behavioural and psychological experts, revealed that women are 13% more likely to ‘mentally move into a home’ then their male counterparts.

Women’s touch

A survey of 1,000 people found that 28% of women repeatedly view a property on the internet having already visited. This is 5% higher than men.

In addition, men were found to be more likely to pull out of a deal because they dislike the seller. One third of all respondents said they judged the property owner on the cleanliness of the home.

Just under one-fifth of all respondents said that they regard block viewings and open house events just as stressful as a job interview!

Women visualise new property more than men

Women visualise new property more than men

Changing traits

Sir Cary Cooper CBE, professor of organisational psychology, thinks than men are a lot more focused on the transactional nature of locating a home. He feels that women however are much more likely to visualise themselves in a new property.

Cooper noted, ‘block viewings can add to the stress and even drive competitive behaviours. Competition for resources and territory in humans is natural and informs a lot of behavior.’[1]

‘Equally, tensions do arise when people are in cramped spaces. House viewings with multiple interested parties could be just as stressful due to these cramped conditions, Mr Evans added.[2]

[1] https://www.estateagenttoday.co.uk/breaking-news/2016/5/women-buyers-more-likely-to-mentally-move-into-a-home-than-men

House Price Growth Up to 10.4% from 6.6% Last Year

Published On: May 27, 2016 at 8:40 am

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Annual house price growth has shot up to 10.4% this year compared with 6.6% 12 months ago, according to the latest UK Cities House Price Index from Hometrack.

The report claims that last year’s slowdown in house prices was partly due to uncertainty over the 2015 general election.

The recent surge in property transactions ahead of the 1st April Stamp Duty deadline resulted in most cities recording a sharp increase in monthly house price growth, with the annual rate of inflation higher than 2015’s in 15 of the UK’s 20 largest cities. Cambridge continues to lead the way, with a 15.8% surge, while Aberdeen is the only UK city to buck the upward trend with a decrease of 6.1%.

UK city house price growth

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Hometrack has also analysed the impact of the forthcoming EU referendum on the economy and housing market. The UK Cities House Price Index examines house price growth and property transactions over the past 20 years to determine how external factors affect housing market activity.

The analysis found that uncertainty amongst homebuyers over the outlook for the economy and personal finances tends to have a greater impact on the number of property transactions than house prices.

House Price Growth Up to 10.4% from 6.6% Last Year

House Price Growth Up to 10.4% from 6.6% Last Year

The report suggests that were the UK to vote for a Brexit, then there could be a 5-10% reduction in property transactions, which would particularly affect London. A vote to remain would deliver a boost to market confidence and deliver the greatest benefits to large regional cities, such as Manchester, Leeds and Birmingham, where housing demand is growing and current rates of house price growth are likely to be sustained.

The analysis highlights how transaction levels have varied over time and some of the external factors that have influenced the housing market.

Although many associate the decade before 2007 with strong house price growth, the research shows that sales volumes dropped on four occasions in London by as much as 15%, emphasising how the capital is more prone to the impact of external factors.

Across the UK as a whole, a 15% drop in sales was recorded in 2005, largely driven by domestic factors and rising interest rates in 2003/04. Contrastingly, the impact of the 2011/12 Eurozone crisis on property transactions was more muted, as the market was beginning to recover after the 2008 financial crash.

The Insight Director at Hometrack, Richard Donnell, comments on the findings: “The economic impacts of a vote to leave will dictate the impact of the housing market. Our analysis of how the market has responded to external factors over the last 20 years suggests that a vote to leave on 23rd June could result in a 5-10% fall in housing turnover, with London bearing the brunt.

“After a period of strong house price inflation over the last five years, the London market faces greater headwinds irrespective of the referendum vote. Turnover fell 7% last year on the back of affordability constraints and weaker overseas demand. Tax changes for investors will reduce demand and we expect price growth to slow in the near future, even if sterling were to weaken and improve the relative value of central London property.”

Donnell continues: “A vote to remain will have the greatest upside for house prices and transactions in regional cities, where the recovery has been more short-lived and affordability less stretched than in southern cities. The boost to confidence from a vote to remain, coupled with low mortgage rates, would most likely benefit cities such as Manchester, Leeds and Birmingham, as housing demand and price growth seem set to sustain itself.”

Property Industry Calls for a Brexit

Published On: May 17, 2016 at 9:28 am

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The majority of professionals in the property industry – almost two-thirds – believe that a Brexit would have a positive impact on the UK housing market.

A study by conveyancing firm My Home Move found that 65% of property agents and mortgage brokers are calling for the UK to leave the EU in next month’s referendum.

The finding contrasts sharply to warnings that the property market will collapse if Britain votes to leave. Ratings agency Fitch claims that house prices could crash by a huge 25%.

Property Industry Calls for a Brexit

Property Industry Calls for a Brexit

The International Monetary Fund also warns that property prices will go into reverse if we leave.

However, the My Home Move survey strongly suggests that agents will vote to leave the EU. Despite this, the same study shows that 53% of the home moving public is still undecided on which way to vote.

The findings arrive ahead of My Home Move’s annual conference tomorrow.

The research also found that most people working in the property industry (90%) say that a lack of stock and high prices have become the new norm.

Interestingly, those surveyed were more in favour of support for downsizers than help for first time buyers.

A total of 61% wanted greater Government help for downsizers, while just 21% called for more support for first time buyers.

The Chief Executive of My Home Move, Doug Crawford, comments: “The market has been suffering from a lack of stock and high house prices for several years, so we’re not surprised that those at the sharp end of the sector are frustrated by what has become the new norm.

“Recent Government changes to Stamp Duty, alongside schemes like Help to Buy, have kept the market going since the recession, but the findings from our survey would suggest that those closest to the market are seeking even more intervention to shake things up.”

He continues: “Nearly two-thirds of the estate agents and brokers surveyed believe leaving the EU would be positive for the housing market, and 85% of home movers are seeking greater Government assistance for those trying to move up and down the housing ladder.

“However, despite the recent policy move to tax additional homebuyers as a way of encouraging more first time buyers onto the market, there remains a level of scepticism that homeownership levels will rise above the current level by 2025, suggesting that without intervention, market conditions would worsen and generation rent would become an even greater reality for many more people.”

Are you decided on which way you will vote in the EU referendum on 23rd June? And what do you think this would do for the property market?

Is buying or renting more affordable?

Published On: May 14, 2016 at 12:39 pm

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A new survey has indicated that buying a home cost less than renting in more than half of the cities in the UK

Research from Strata Homes has investigated where monthly mortgage repayments work out cheaper than rent.

Cost-effective

Data from the report indicates that buying is more cost-effective in Doncaster, Hull and Bradford. London, Brighton, Bristol and Swansea however were found to be the only cities where it is more cost effective to rent.

Utilising available statistics, Strata Homes calculated the average sale price of two-bedroom properties in Britain. From there, the firm worked out the average monthly mortgage repayments, in comparison to the average monthly rental fees.

Doncaster, Hull and Bradford were found to be the three cheapest areas in the UK in which to purchase a house. Glasgow too was found to be cheap, with mortgage repayments from just £520 for a two-bedroom property, in comparison to the £729 average rent per month.

Is buying or renting more affordable?

Is buying or renting more affordable?

Differences

In Peterborough, a first-time buyer using the Help to Buy scheme would save £344 per month paying off a standard mortgage, as opposed to renting a similar property. Meanwhile in Manchester, a two bedroom house would cost an average of £762 per month to rent, but would cost just £676 per month in mortgage repayments.

Those renting a house in Birmingham were found to be paying just £2 less than homeowners in the city.

Gemma Smith, sales director at Strata Homes, noted, ‘once you get over the initial deposit sum, people are surprised at how much you can save in some areas of the UK than to rent. Thanks to the Government’s Help to Buy scheme, it is easier than ever to get onto the property ladder with over 3,000 accounts opened so far this year.’[1]

An interactive map of where buying and renting costs differ across the UK can be found on the Strata Homes website.

[1] http://www.propertywire.com/news/europe/uk-rent-buy-cities-2016050411875.html