More than one in eight pull out of property transactions following EU referendum result
The poll by removals firm Bishop’s Move, conducted among 1,200 people, found 13 per cent of those who had been involved on either side of a housing transactions have pulled out in the wake of the referendum result.
While the survey showed up to half of those involved in a deal are seeking to up the pace to ensure completion before the government invokes Article 50, overall the findings will add weight to those predicting a drop in activity after the vote.
How this will translate into house prices is less clear. If it is indicative of a drop in demand, it could mean prices are set for a marked fall, especially as buyers are also likely to be bolder in demanding discounts given the economic uncertainty.
On the other hand, there is an acute housing shortage in the UK that has been driving house price rises in recent years. If the fall in sales is more a reflection of sellers waiting for the market to stabilise, this could support prices – or at least ensure a “soft landing”.
Think-tank Capital Economics predicts the volume of transactions will fall ten per cent in the second half of this year, reports The Times. At the same time, it believes house price growth will fall from around five per cent to a still-positive two per cent.
Similarly, the Centre for Economics and Buyout Research forecasts a drop-off in activity and price growth to fall from eight per cent earlier this year to 2.2 per cent in 2017. It predicts house prices will be £40,000 above current levels in five years, says the Daily Telegraph.
The think-tank does, however, agree that the London market, especially in prime central areas where valuations are more than double the national average, could turn negative.
Chris Marshall of Bishop’s Move said: “There are already less properties currently available… compared to three years ago with reports suggesting ten potential buyers for every property on the market, which makes for those selling think they can hold out for the higher price.”
Post-Brexit house prices remain ‘robust’ in July
Those hunting for signs of a post-referendum slowdown in the property market were seizing this morning on the latest Halifax house price index, which showed a month-on-month fall in July.
“House prices fell one per cent last month following the vote to leave the EU,” says The Guardian. “The month-on-month fall took the average house price to £214,678. The decline was the third this year and largely offset a 1.2 per cent increase in June.”
However, as with all data in the relatively short period since the Brexit vote, the trend is not as simple – or negative – as this might suggest.
Halifax cautioned that monthly numbers can be “erratic” and that “falls often occur within an upward trend”. It prefers instead to focus on three-month rolling averages, which it compares with the previous month and year.
In this light, house prices in July were “robust”, it said. Prices rose 1.6 per cent in the three months to July compared to the three months ending in June, representing acceleration in growth from the 1.1 per cent for the three months to May.
On an annual basis, prices for the three-month period were up 8.4 per cent, unchanged from June.
There are signs that house price increases might be slowing, with both the quarterly and annual rates of growth below their peaks earlier this year. However, that has at least as much to do with the rush to beat April’s stamp duty hike on second homes as the Brexit vote.
Martin Ellis, Halifax housing economist, said: “Overall, it remains too early to determine if there has been any impact on the housing market as a result of June’s EU referendum result.”
A further positive sign came from underlying data for the three months to June showing the volume of transactions actually increased in the lead up to the Brexit vote, says the Financial Times.
Added to that is yesterday’s rates cut from the Bank of England, which should translate to a fall in already record-low mortgage costs that would support demand in the near future.
Ben Madden, the managing director of London estate agents Thorgills said: “Although house prices are easing in the post-Brexit world, they’re proving far stickier than many predicted.
“The acute supply shortage was always going to act as a glass floor under prices post-Brexit and the latest rate cut has made that floor a few inches thicker.”
Prime London house prices fall at fastest rate since 2009
Prime central London property prices have fallen at the fastest rate since the end of 2009, with the EU referendum adding to the deterioration in buyer sentiment that set in last year.
Estate agent Knight Frank’s prime central London index dropped 1.5 per cent in July from the same month in 2015, amid uncertainty following the vote for Brexit and fears of a resulting economic slowdown, reports Reuters.
SOURCE: The Week
