Brexit is not necessarily bad for the housing market
It has been a week of the ‘B’ word with Brexit being named in many pieces of commentary and reports but it is not all in a negative manner.
It is hard to say that the slowing housing market conditions would not have happened without Brexit, but Brexit is not bad, it is a challenge, a change, a hurdle to be overcome.
What disappoints me is that everything negative is now being blamed on Brexit. Slower house price growth was predicted a year ago and it is well known that economic and political uncertainty does have an impact on markets, so let’s not put everything down to leaving the European Union.
The latest monthly report from the National Association of Estate Agents (NAEA) shows that demand from prospective home buyers and the supply of available properties for sale both fell by 13% in October, but sales to first time buyers increased.
This is not bad news, it is not doom and gloom. It is positive that more first time buyers are getting on the housing ladder as they are needed to keep things moving and it should be remembered that soaring prices are bad for them.
The NAEA says that uncertainty surrounding Brexit is having an impact as it is possible that many buyers and sellers are putting their plans on hold while they wait for clarity on what the UK’s future relationship with the EU will mean for them and the property market.
I don’t agree. They are adopting a wait and see attitude because they are unsure about interest rates, and first time buyers still find it hard to save for a deposit. This would be the case without Brexit. Interest rates didn’t rise directly because of Brexit. Look at the United States, for example, where interest rates are rising steadily and they don’t have Brexit.
In the mortgage market brokers are now blaming the slowdown on Brexit. The latest monthly report from the Intermediary Mortgage Lenders Association (IMLA) reports that brokers have seen the largest drop in business volumes in more than two years, with the trend being put down to Brexit uncertainty.
It says that sentiment among buyers and movers is currently at a low point, adding that whilst the Brexit negotiations remain so complex and uncertain, many people may be adopting a wait and see approach before moving forward with a property purchase.
The Brexit word comes in handy, it would seem. Yet, the new index report from Hometrack suggests Brexit is not having much of an effect on housing in key regional cities with six of the largest cities recording year on year growth figures over 6% with Leicester up 7.7%, Edinburgh up 7.4%, Manchester up 6.3%, Birmingham up 6.2%, Nottingham up 6.1% and Liverpool up 6%.
Since the Referendum vote in June 2016, Birmingham, Edinburgh and Manchester have all registered house price growth of 15%, almost three times the growth in average earnings.
Meanwhile, a new analysis from land agents Aston Mead suggests that Brexit has created pent-up demand, especially in London and the South East, which is set to boost activity next year and provide real opportunities for those buyers who are ready to trade up in the second quarter of 2019.
As always, it is necessary to read beyond the headlines. Uncertainty right now, I believe, has more to do with Prime Minister Theresa May’s handling of Brexit, rather than Brexit itself. She is facing a nightmare getting her deal through Parliament because she has no majority because she called a general election when she didn’t need to. She has not explained the deal well at all, that has created uncertainty.
As far as the property market is concerned we do not want boom and bust, and Brexit will create neither. You can choose whether it is a positive or a negative, but a steady outlook is preferable.
Editor Property Wire
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