Industry Roundup – September 2019
In our September industry roundup, we examine the trends that are transforming the property sector and the residential market heading into October.
Residential Property Sales Maintain Stability
According to HMRC, residential property sales have remained fairly stable throughout August and September, with just a 0.9% drop year-on-year since 2018. In fact, the figures show that month-on-month there has been a 15.8% rise, equalling around 99,890 residential transactions and 11,300 non-residential transactions.
Considering the effect that Brexit is having on the market, Neil Knight from Spicerhaart believes that this demonstrates there’s still enough appetite in the market: “We’re clear that there is plenty of demand out there – regardless of political uncertainty people still need and want to move house.”
“For buyers and landlords with capital, there are bargains to be had, and it appears that many are abandoning the wait and see approach in favour of just getting on with it. Mortgage rates are very competitive, employment is high and earnings have improved, so there are reasons to be positive.”
Most Tenants Don’t Want to Buy
A study by Buy-to-Let lender Landbay has revealed that only 42% of private tenants are interested in purchasing a new home in the new future. With 2,000 respondents, the study showed that older renters – aged 55-and-over – were the least interested in buying somewhere new.
This fits the evidence that Britain could soon be a nation of renters. With private renters set to outnumber homeowners by 2039, ‘Generation Rent’ seems to be in full swing. For those who aren’t purchasing, flexibility is a major positive with nearly 25% citing it as their reason for renting. John Goodall, CEO of Landbay, believes it’s a sea change that landlords and the Government need to consider:
“This research suggests the UK’s enthusiasm for homeownership may be waning. Conversations around the private rental sector often assume the bulk of renters are simply biding their time until they can buy a house.
“However, the changing face of employment and a thirst for flexible living mean renting is more attractive than ever and landlords should reflect this in their interactions with tenants. It’s crucial that investment in the private rental sector becomes a priority. The Government must focus on encouraging purpose-built rental properties and cease its penalisation of landlords.”
UK Rents Increase by 1.3% in the Last 12 Months
Data from the Office for National Statistics has shown that rents paid by tenants in the rental market have risen by 1.3% in the 12-months to August 2019. While rental growth has generally slowed since the beginning of 2016, driven by an underperforming London market, rents have started to pick up since the end of 2018. Over a long-term view, rents have increased by 7.9% between 2015 and 2019 nationwide, steadily rising in parallel with demand.
UK Market Set for Post-Brexit Surge?
New research has shown that 51% of UK property investors believe there will be a surge in activity within the sector after the 31st October. Largely shaped by long-term confidence in the market’s resilience, only 31% of the investors surveyed believe that leaving the EU will negatively affect the value of their property portfolios.
While there’s no denying that Brexit uncertainty has meant more cautious investing habits, a real estate spending spree post-Brexit would not be a huge surprise for international investors that can find value in foreign exchange and still avoid the brunt of an uncertain market.
The outlook for the property market seems to hinge on a final decision on Brexit, regardless of result. While we’re starting to see prices level out (and in some cases start to rise), most figures in the industry seem to agree that it’s the uncertainty that is having the most impact, evidenced by some of the news in this industry roundup for September.
What we are seeing is that even despite the political landscape, UK property remains robust enough to entice many investors that want affordability and consistent returns. As transactions stabilise and rents continue to rise, the post-Summer ‘bounceback’ that was predicted by Rightmove might actually be happening – just not as soon as we expected.