Sensation sells! The press is having a field day with all sorts of Brexit-related headlines and claims about how the current state of confusion is negatively impacting on the housing market. The reality is that latest figures published by respected sources support our own view that it’s not quite a buyers’ market yet, even though, according to the Nationwide, house prices are just 0.4% higher than this time last year.
The latest Propertymark Housing Report found that NAEA members report a 2.3% monthly drop in the number of house hunters registered per branch. Yet, in the same period, property supply fell by 14%. So although there would appear to be a softening of activity, demand continues to significantly outstrip supply. So any talk of a property crash is substantially misplaced. Anyone thinking of selling this spring would be well advised to bring this forward asap!
Interestingly first time buyers now represent a record 50% of the market (source Halifax). FTBs have of course been encouraged by the government’s Help-to-Buy scheme as well as SDLT concessions. Nevertheless, the market has historically been fed from below, and people who sell their property to a first-time buyer often become second time buyers themselves, prompting further up-line activity. This activity is likely to be further stimulated if up-line sellers become increasingly willing to accept a lower offer on their property.
Rents continue to rise, with around 26% of tenants experiencing a rent increase in January alone (source ARLA), making home ownership an even more attractive alternative.
This is supported by the latest English Housing Survey from the Ministry of Housing, Communities & Local Government (MHCLG) who report a slight rise in the home ownership rate, which now stands at 63.5%. More people owning means more people buying and selling.
The economic fundamentals for a sustainably robust property market are very much in place – employment is at a 40-year high, interest rates remain incredibly low and affordability has also increased. According to Private Finance, ten years ago, the average mortgage borrower could expect their mortgage to account for 43% of their monthly income; today this stands at just 31% with payments around 13% lower too, despite soaring house prices.
In terms of sentiment, around 59% of Brit are expecting to see property prices rise over the next three years (source AnyVan survey), against 41% not expecting a rise. This suggests the perfect balance for a “keep calm and carry on” approach – generally positive and mildly inflationary. Maybe spring has come early this year!
Needless to say, if you’d like to take advantage of the market, even if only to see how it could potentially affect the value of your home, please feel free to ask us round for a chat. It’ll only cost you a cup of coffee (white, no sugar please).
Neil Newstead, FARLA MNAEA MIRPM
Chief Executive Officer