Industry Roundup – February 2019
As the deadline for Brexit draws nearer, the property sector is still trying to predict where the market sits right now and what this political uncertainty could mean for UK property market trends.
Using research from within the industry, a number of trends can be noted up and down the country.
12 cities have relatively strong market fundamentals
HomeTrack analysis shows that across 12 cities outside the South of England, market conditions are actually much stronger. Despite the slowed growth that has come with political uncertainty, the potential for further growth is much higher.
Nottingham has the strongest market fundamentals
In terms of time to sale and average asking price discount as metrics, Nottingham is leading the way. At an average discount of 2% and less than 8 weeks to achieve a sale – house price growth is also staying consistent at 5%.
Outlook for the rest of Q1 2019
Latest data shows that uncertainty has impacted the headline rate of growth but demand for housing is still on the increase. City level house price growth is expected to become more consistent in the near future, buoyed by underlying market conditions remaining strong across regional cores. Once the political outlook becomes clearer, the potential for further price inflation increases.
Meanwhile, research by The Halifax (part of the Lloyds Banking Group) has acknowledged that despite the month-on-month price change showing a volatile measure of house prices, the annual change is more stable – prices are up 0.8% on this time a year ago.
According to Russell Galley: “This could either be viewed as a story of resilience as prices have held up well in the face of significant economic uncertainty or as a continuation of the slow growth we have witnessed over recent years… it is key underlying factors of supply and demand that will ultimately shape the market.”
Regional Differences Remain
London’s once-strong market is continuing to face a downturn – with political uncertainty impacting consumer confidence. The ‘wait-and-see’ approach that many London-based investors are taking is being replicated around the wider UK according to estate agents Foxtons.
Supply and Demand
While the future is uncertainty, historical evidence suggests that positive growth will continue as the market bounces back. The wider problem facing the UK is a chronic undersupply of residential property. Demand is growing and the market is struggling to meet it, according to the SevenCapital Brexit Survey.
City centre living, in particular, is growing in popularity, meaning residential property in the heart of ‘active centres’ is becoming much more for already tenanted, completed or even properties under construction. It’s no surprise that supply and demand drive property investment, creating new opportunities for the savvy investor within hotspot areas.
While the population of many cities is set to grow with this demand, experts are predicting that Birmingham alone will need nearly 100,000 additional households over the next 20 years. For investors, this translates into huge tenant demand all looking for rental opportunities, particularly as city centre living and ‘Generation Rent’ continues to grow in popularity.
Across the UK market, property prices continue to be affected by the uncertainty of Brexit, slowing growth in areas that have previously performed well. The ‘regional renaissance’ continues to dominate, with cities in the Midlands and the North overperforming against London and the Commuter Belt. March will be vital as we run up to the deadline, especially if a decision on Brexit is on the horizon.