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Latest house price index shows no Brexit effect on UK property prices
House prices in the UK increased by 0.5% month on month in July, defying the vote to leave the European Union which many commentators though would have an adverse effect on the nation’s property market. It means that the annual rate of house price growth edged up from 5.1% in June to 5.2% in July, taking the average price of a home to £205,715, according to the data from the Nationwide House Price Index. It is the first index from a major lender to be published since the historic vote on 23 June and overall the index report says that the UK housing market is still seeing steady growth. However Nationwide chief economist Robert Gardner said it is important to note that the index is based on data at the mortgage offer stage so there still might be an impact in future data. ‘It means any impact from the vote may not be fully evident in July’s figures, as there is a short lag between a buyer making the decision to purchase a property and applying for a mortgage,’ he explained. He also believe that the outlook can only be described as uncertain. ‘It will be tempting for commentators to assign any trends in the coming months to the impact of the referendum. Housing market transactions were always likely to soften over the summer after the surge in activity in March, as buyers brought forward purchases of second homes to avoid the stamp duty levy, which took effect in April,’ he pointed out. ‘Determining how much of any fall-back in activity is the result of the tax changes and how much is due to the referendum will be difficult. In the near term, increased economic uncertainty may lead to weaker demand for homes. Leading indicators are consistent with softening ahead. Household confidence fell sharply in the wake of the referendum result, especially attitudes towards making major purchases, which in the past has correlated with mortgage activity, though less closely in recent years,’ he added. He also pointed out that in the run up to the vote the Royal Institute of Chartered Surveyors (RICS) reported declines in new buyer enquiries and expectations of weaker price growth amongst surveyors. ‘Although these trends predate the vote and are likely to have been impacted by the recent tax changes as well as the referendum. How the labour market evolves will be crucial in determining the demand for homes in the quarters ahead. It is encouraging that conditions were robust in the run up to the vote, with the unemployment rate falling to a ten-year low in the three months to May,’ Gardner said. ‘The decline in long term interest rates to new all-time lows in recent weeks should also help to keep borrowing costs low and provide some support for demand. Even if there is a fall back in demand as a result of economic uncertainty, the impact on house prices is not certain, as potential… Continue reading
Brexit analysis shows vote has affected UK prices and sales
Overall, both property prices and sales in the UK have fallen by around 8% since the referendum decision to leave the European Union, but there are wide regional variations. London, the Home Counties and Northern Ireland have been the hardest hit by Brexit, according to a survey covering the four weeks before and after the vote on 23 June carried out by ReallyMoving. It found that sales fell by 8% and prices also fell by 8% across the country but sales were down much further in London by 44% while prices in Scotland increased by 15%. Sales volumes fell markedly, down 12% for the month after the vote compared to the month before, based on the 35,000 people who registered for quotes for conveyancing, surveys and removals with the firm. Although some summer seasonal decline is expected, typically around 4% to 5%, the firm says that this is a seasonally adjusted 8% fall, an unusually high volume drop and the fall of 8% in average property is a significantly larger month on month change than seen at any point in the previous five years. Looking at the breakdown in prices and transaction volumes across the UK reveals striking regional differences. While London remains by far the highest-priced region, prices have fallen 12% since Brexit, and property purchases down 44%. The number of property purchases has fallen in all regions, most strongly in London, the Home Counties, and Northern Ireland, while Wales saw a drop of just 3%. Although prices fell significantly in London, there were even bigger declines in the North East of England and Northern Ireland, as both fell 17%. But, prices rose by 15% in Scotland, and by a more modest 7% in Wales. International moves have increased markedly since Brexit, but only for moves away from the UK, which have increased by 43%. Moves to the UK are broadly unchanged. The most popular destinations for international moves from the UK are to Spain, USA, Canada, Australia, Germany and Italy. ‘Brexit has had a marked impact on the UK property market. The drop in transaction volumes has been striking, particularly in London, the Home Counties and Northern Ireland,’ said Rob Houghton, chief executive officer of ReallyMoving. ‘In the medium term we would expect volumes to pick up if the price falls are maintained, but it is clear that many prospective home movers are sitting tight until there's greater clarity over the post-Brexit economy and our likely new relationship with the rest of the EU,’ he added. Continue reading
Sales up almost 5% in Scotland but prices down
Property sales in Scotland increased by almost 5% year on year in the second quarter of 2016 but prices have fallen by 2.3% over the same period, according to the latest official data to be published. Sales were up 4.9% to 25,760, the data from the Registers of Scotland shows, the highest volume of sales for this quarter since 2008/2009 with the average property price down to £164,326. A breakdown of the figures show that the highest percentage rise in volume of sales was recorded in Argyll and Bute, with an annual increase of 24.5% compared with the same quarter the previous year. Edinburgh City recorded the highest volume of sales at 3,178, a rise of 8.6%. The largest percentage fall in volume of sales was in Aberdeen City, which showed a drop of 19.5% to 1,063 residential sales compared to the same quarter last year. The highest percentage fall was recorded in West Dunbartonshire, with an average price of £105,859, a fall of 12.7% compared with the same quarter the previous year while East Renfrewshire recorded the highest average at £241,364, an increase of 11.7% compared with the same quarter the previous year, which was also the largest percentage rise of all the local authorities over the year. The total value of sales across Scotland registered in the quarter increased by 2.5% compared to the previous year to just over £4.2 billion. The City of Edinburgh was the largest market with sales of £745.7 million for the quarter, an increase of 7.1% on the previous year. South Ayrshire recorded the highest increase in value with sales of £92.2 million, an increase of 27.8% compared with the same quarter last year. Aberdeen City showed the largest decrease in market value, a decrease of 24.4% to £223.8 million compared to the same quarter last year. All property types showed a decrease in average house price in this quarter. Terraced properties showed the biggest decrease down 5.6% to £132,700. Detached, semidetached and flats saw decreases in average house prices of 3.7%, 0.8% and 4.0% respectively. With the exception of detached properties, all property types showed an increase in sales volumes with flats showing the biggest increase at 11.2%. The volume of sales of detached properties decreased by 3.4%. The rise in property sales in Scotland over the last quarter indicates that there is still confidence in the market, according to Michelle Grant, investment director of Grant Property. ‘From a price perspective we are surprised to see a decline. On the ground we are still seeing prime city centre properties in Glasgow and Edinburgh selling for between 10% to 20% over home report valuation,’ she added. Simon Brown, partner and head of residential sales at CKD Galbraith, believes that the Scottish property market has remained resilient to political and economic changes despite the uncertainty of Brexit. ‘As a firm we have not experience any negative effects or hesitancy from… Continue reading
