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Bullish or fragile - a look at the housing market


With Brexit negotiations due to commence, a general election looming and increasing uncertainty regarding the UK’s economic prospects, Tom Killen looks at the housing market.

The UK certainly in uncharted territory and it is impossible to predict what is going to happen to the housing market. Analysing where it stands to day is equally frustrating with commentators and surveys tending to produce mixed messages. Here, we try to make sense of the current situation. 

Over the past 12 months, the average selling price has risen to £313,655 {source: rightmove] and, based upon Land Registry data, this represents an increase of 5.8%. The first time buyer sector has been particularly strong with an annual rate increase of 6.5%. 

With low interest rates and most agents reporting strong buyer demand during the Spring, it would be forgiveable to jump to the conclusion that all is rosy in the housing market garden. There are however signs that a slow down is on the cards. 

In their recent survey, Nationwide considered that the increase in house prices had peaked and that inflation is on its way towards zero. The number of mortgage approvals is falling and the rate of growth for April at 1.1% was the lowest monthly increase for 7 years. This has led to the lowest annual rate of growth for 4 years. 

The most recent survey of property agents and surveyors by the RICS has revealed less confidence in the property market with most now expecting a slow down in market conditions. Whilst prices are not expected to fall, they are anticipated to increase at slower rates.

It has been assessed by the HomeOwners Alliance that 7.5 million homeowners have put off plans to move for a number of reasons and not just because of Brexit uncertainty.

The increased cost of living, difficulties in securing a mortgage and static wage inflation are all influencing people’s feelings on selling and buying. The level of stamp duty is also acting as a deterrent, particularly in London where house values are stagnating, if not falling.

The level of transactions is at historically low levels and this is helping to keep a floor under house values. Agents are reporting very low levels of stock and those who are looking to buy are increasingly frustrated at the lack of choice. This is leading to fairly priced, well presented properties in the right locations selling quickly.

Confidence is becoming increasingly muted, if you are looking to sell your home in 2017 then careful planning may be required. 

It should be remembered however that what one loses on a sale may be gained on a purchase and very few sellers are likely to lose out as values have risen so strongly in recent years. A flexible approach on timing and price needs to be taken.  

With uncertainty likely to increase as the Brexit negotiations progress, there is every prospect that matters will not improve much further and a shock could lead to a weakened economy and house values falling. 

So in conclusion, it has to be acknowledged that there is increased uncertainty in the housing market but houses are also readily selling. Whether buying or selling, never before has it been more crucial to take advice from a local and experienced agent – hopefully Killens will be your choice.

Tom Killen BSc (Hons) MRICS FAAV
T. 01761 241127
E. tom@killens.org.uk

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