Prior to the EU referendum, the UK’s housing market was often described as a bubble. With some time having passed since the vote and a lot of data being collected, find out what the market currently has on offer.
The slowdown opportunity
An important factor when looking at the housing market is the transaction volume. Recent data from HM Revenue and Customs showed completions fell year-on-year. This drop, however, can be explained by the rush to buy in March from investors trying to beat the new stamp duty surcharge that came into effect from April 1.
Halifax on the other hand found that house prices experienced an increase month-on-month in June. Looking at the bigger picture though, the growth rate has been falling slightly.
Overall, the market is slowing down. Many experts and commentators voiced opinions that this development is more of a natural cycle rather than a big surprise, especially when also factoring in that we’re getting closer to the annual time for the market’s summer dip.
Competition is tough
In case homeowners will actually put off selling, those spectacular properties that come onto the market will be massively sought after. This will force buyers to make up their mind quickly to secure the right property or, even worse, offer more than asked for.
Homeowners are afraid of a price drop
Only six weeks after the referendum, a lot of the data available is more of a summary of people’s sentiments rather than stone cold fact.
Whilst Londoners are still feeling pretty confident when it comes to the growth of their house prices over the next year, the rest of the UK had a very split opinion, as Knight Frank’s and IHS Markit’s house price sentiment index revealed.
The capital’s high end market might suffer
Transaction volumes for prime property in central London are now lower than they were eight years ago, in 2008. Some developers have already slashed the prices for some of their most expensive central London developments and investors are trying to sell before making too much of a loss.
Having said that, you should also keep in mind that Brexit isn’t necessarily to blame for difficulties in London’s housing market. Some developers slashed their prices earlier this year, way before Brexit became an actual force to fear.
Assurance is important
The British housing market, and London in particular, is a complex concoction.
For many investors, however, bricks and mortar is still the best place to put their money. Which is why build-to-rent property which often comes with a rental assurance for a certain amount of years and offers modern accommodation to key workers and young families has seen a significant increase in interest from all fronts: builders, investors and Generation Rent.