Implications Of Brexit’s Wait And See Property Market
Brexit uncertainty is creating a ‘wait and see’ approach to home buying in the current climate according to many market commentators with a variety of property figures corroborating these sentiments.
The Nationwide House Price Index indicated that buyers were reluctant to stoke their interest following the new year with house prices only increasing by 0.1% annually and no 3 month on 3 month change in January.
The figures for February have found that house prices have reduced by 0.4% over a three-month period and falling by 0.1 percent from the average house price of £211,966 in December. With prices reducing to £211,304, is the market suffering as a result of Brexit uncertainty?
The Nationwide report also states that the number of people obtaining a mortgage in 2018 increased by 5% with 6.9 million households owning their own home through the use of a mortgage.
In contrast, the opening mortgage figures for the month of January, from UK Finance, suggest that significantly fewer people were able to obtain a mortgage at the start of 2019, or fewer people were applying for finance. Gross mortgage lending in January fell by 1.5% when compared with the same month in 2018 to £21.6 billion. Remortgaging figures also reduced in January by 3.1%.
A decrease in lending in January could be attributed to fewer buyers entering the market due to Brexit uncertainty. The January figures from NAEA Proprtymark Housing Report highlight a reduction in potential buyers registering with estate agents in the opening month of the year.
Whilst the number of house hunters decreased by a mere 2% from December’s 304 registered house hunters per branch to 297 in January, this figure is down by a fifth (19%) on the figures taken from January 2018.
It would appear that available property stock is also in free fall, falling from 42 properties per branch in December to 36 at the start of the year, further suggesting that both buyers and sellers are reluctant to enter the property market during the height of Brexit mist.
Robert Gardner, Nationwide’s Chief Economist, said: “After almost grinding to a complete halt in January, annual house price growth remained subdued in February, with prices just 0.4% higher than the same time last year.
“Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, but survey data suggests that sentiment has softened.
“Measures of consumer confidence weakened around the turn of the year and surveyors reported a further fall in new buyer enquiries over the same period.
“While the number of properties coming onto the market also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers in recent months.
Mark Hayward, chief executive of NAEA Propertymark, said: “January is usually the time where we’d expect to see house hunters flood the market following the festive lull; however, this didn’t happen last month. It’s normal that during a period of uncertainty, buyers put their plans on hold, and until there’s further clarity on what Brexit will mean for the market, we expect the level of house buyers to remain stagnant.
“However, it’s clear that people still want to sell their homes, and there’s properties available for those looking to move. While FTBs are taking advantage of this situation, those hoping to secure a property may well find the market is leaning in their favour, as the number of sales agreed per branch return to the level seen at the start of 2018. Although sellers are usually keen to hold off until they secure the ‘right price’, when the market is slow, they are typically more willing to negotiate. After all, when demand falls, and supply remains the same, it’s a buyers’ market.”
John Goodall, chief executive officer of Landbay, commented: “This wait and see approach, entirely understandable in the current economic climate, is exacerbating the chronic undersupply of available housing. The current stalemate means that it falls to landlords, both private and institutional, to pick up the pieces and provide quality housing for those who would be buyers in more normal economic conditions.”
Have you noticed a reduced market in the opening months of the year? Do you think a ‘wait and see’ approach will be applied until there is a more definitive understanding of the UK’s Brexit outcome?