Tuesday, 23 August 2016

Post Brexit property disaster - more like a ‘soft landing’ so far Nationwide claims

Nationwide has recently reported that house prices continued to rise 0.5% in July and up by 5.2% annually. Although their chief economist, Robert Gardener, warns that demand could still fall.

"This is the first month's data following the EU referendum. However, it is important to note that, in constructing the index, we use data at the mortgage offer stage, this means any impact from the vote may not be fully evident in July's figures, as there is a short time lag between a buyer making the decision to purchase a property and applying for a mortgage."

"It would 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 bought forward purchases of second homes to avoid the Stamp Duty levy (Land & Buildings Transaction Tax), which took affect in April."

Commentators and speculators all have differing opinions of how much impact the referendum will have overall but as a result of the tax changes on Buy to Let properties and uncertainty over the economy there will inevitably be an overall softening of the housing market.

The lack of supply and Estate Agents stock levels already being so low has lead to more of a 'soft landing' than a full blow crash. The same is very much true for Lettings, new investment landlords are being generally cautious buying properties until they see how prices fair and tenants are tending to stay to see how much rents will rise or fall, all leading to a lack of supply in the rental sector. This continued lack of supply will inevitably lead to a continued rise in rents and house prices demand continues to outstrip supply.

This has been back up by The National Association of Estate Agents' whose June housing market report found 57% of agents reported a drop in demand and 58% saw supply fall in the week following the vote. However, agents remain positive, predicting this would level out over July.

Mark Hayward, managing director of the NAEA, said “In periods of extreme political and economic uncertainty, the housing market will always respond.  We remain upbeat and need other in the industry to do so as well. The new housing minister confirming his commitment  to building a million new homes will be encouraging for many buyers, especially those looking to buy their first home. Hopefully we should soon see housing market confidence bouncing back to the levels pre-brexit."

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