There is life in the UK housing market beyond Brexit
Annual house price growth in the UK may have reached its slowest rate since May 2013 but the outlook is not gloomy and there is life in the market beyond Brexit.
The figures last week from the Nationwide index of year on year growth of 1.6% in was less than the 2% to 3% that this lender index has shown in the last year but chief economist Robert Gardner does not seem worried by that.
Indeed, he said in the index report that his is broadly in line with expectations with the lender forecasting price growth of 1% in 2018 with scope for activity and prices to pick up on 2019 once the Brexit negotiations are over and the UK has left the EU.
So it should be no surprise that the latest forecast report from Savills predicts that prices are set to rise by 14.8% from 2019 to 2023, broadly in line with incomes. But it will be the Northern part of the country that sees the strongest growth, as has been happening in recent months.
Savills predicts that growth could range from 21.6% in the North West of England to single digit growth in London and the South. Other areas of strong growth include 20.5% in Yorkshire and Humberside, and 19.3% in the East Midlands, the West Midlands and Wales. It also predicts five year growth of 18.2% in Scotland and 17.6% in the North East.
The report points out that sales, rather than house prices, are often seen as the ultimate measure of market strength and transactions have fallen only 6.9% since the Brexit vote to 1.145 million, demonstrating the resilience of the UK housing market.
But 2019 is likely to be a year of more modest price growth with the market in the South East and the East of England set to be flat and prices falling by 2% in London while the South West growth forecast is just 0.5%. This contrasts with annual growth of 3% in the North West, the East Midlands, and the West Midlands and growth of 2.5% in Scotland and Yorkshire and Humberside.
Several other pieces of research in recent days backs up the lack of movement in the London markets. Winkworth’s latest report says that tax and Brexit are stifling growth, particularly from an investment point of view. The London market was boosted by overseas buyers but they are not adopting a wait and see attitude due to the uncertainty.
But it points out that there is still movement and properties priced correctly are selling well while the current market is being driven by ‘needs based’ buyers looking for value rather than investment and this means that small to medium sized flats have dominated sales this year and there is also a shortage of good size family homes.
The latest analysis from Knight Frank points to an improved market in London’s prime property sector after Brexit. It explains that there are signs of pent up demand building ahead of March next year when the UK finally leaves the EU.
While there has been a 9% decrease in sales in the 12 months to August 2018 in central London there has been a 31% rise in prospective buyers in central and outer London and there has been a 12.5% increase in the number of new prospective buyers in the third quarter of 2018 compared to the same quarter of 2017.