This update is by economist Chris Worthington, who is a regular PIM speaker.
As Brexit looms, I decided to research views on the possible impact on the housing market. Here are some of the comments that I came across.
- A report from the CBI stated quite bluntly that “there are no areas of relevance to the economy where the UK, the EU and the business community are prepared well enough for no deal.”
- The Times Bricks and Mortar property supplement found that house buyers in some places continue not to be overly concerned about Brexit. The average price in Liverpool for example is 4% higher than a year ago. However in London and the South East May’s failure to agree a business deal has been a source of anxiety. New data from the Office of National Statistics (ONS) shows that prices in Westminster are 10% lower than last year.
- The mortgage broker Mortgages for Business reported in their quarterly buy to let update that for a majority (54%) of their customers had not changed their investment plans because of Brexit while 21% were restricting their activities to re – mortgaging their existing properties. The remaining customers were “hanging fire.”
The latest edition of the UK Cities House Price Index published by Hometrack presents a more optimistic overall picture for house prices with a year on average increase in the major cities of 1.7%.
However some commentators had highlighted the possibility of a flood of properties onto the market when we finally leave the EU from owners who held back from selling before Brexit. This could reduce prices but given the pent up demand for housing the impact may be relatively small.
The latest statistics for rents in the UK are also positive for BTL investors.
The Deposit Protection Service Rent Index has reported a sharp rise in average monthly rent from £757 to £771, an increase of 1.8% during the second quarter of 2019. This is the first uplift in average rents since 2017.
Daren King, head of tenancy deposit protection at the DPS said
“The increase in rents is striking after a prolonged period of stagnation in the market. Many commentators predicted that the tenant fees ban would drive up rents as letting agents look to alternative sources to cover costs but with the ban coming late in this quarter it is too early to say what is behind the hike.”
Miles Shipside, Commercial Director at Rightmove, commenting on the impact of the tenant fees ban in Property Investor Today said that
“a spike in tenants looking for a new place to live indicates that that some held out until fees to start a new tenancy were removed by the government on the first of June. The ongoing shortage of quality stock could end up being exacerbated further by landlords whose tenants are now giving their notice so they can move on without paying fees and some of those landlords are then choosing to sell up rather than let it out again.”
Our Next Property Meeting
We will all be discussing the latest position on the property market in Bristol and across the UK at our next PIM on Thursday 26 September 2019 at Future Inn, Bristol, BS1 3EN.
We hope you will join us then.
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