On the day we awoke to the shock news that we were on our way out of the EU, Jackson-Stops & Staff showed some presence of mind by analysing over 750,000 live UK property listings (90% of the national total). The team found that 41.5% of properties on the market at that point were already under offer. But how does that percentage look now, two weeks on?
Quite similar actually. 39.9% are now apparently marked down as under offer, which the firm says is “an indication that the forces driving decisions to buy and sell remain unaffected”. Interestingly, the number of properties on the market looks to have increased by more than 21,000 since the Brexit decision.
We probably won’t see the full impact until the autumn though, says JSS boss Nick Leeming“Despite the upheaval following the Brexit decision the level of demand vs. supply has remained broadly static UK-wide, showing that in the short term buyers and sellers are still being driven by the normal catalysts for entering the property market. The true impact of the Brexit decision will only become apparent in around autumn, once we have navigated through the normally quieter summer months and a new Prime Minister is in place.
“There could even be some emerging positives in this time – lower interest rates may mean enhanced affordability and our central London offices might benefit from the favourable exchange rate encouraging international buyers. The last couple of weeks has shown us that life goes on for the UK property market. However, the endemic problem remains – the UK economy is blighted by an undersupply of homes and the government must not allow the upheaval of Brexit to wholly divert its attentions away from this central issue.”
Here’s the firm’s take on what’s occurring in the country and resi development markets…
Country house market
The Brexit decision will not negatively impact prices in the country property market because it does not detract from the pent up UK housing market demand – stamp duty, on the other hand, has “seriously impacted the market in homes worth over £1 million.
Tim Dansie, Director:“While dented consumer confidence will cause a slow-down in activity over the rest of the summer, the life decisions that encourage people to buy and sell property will of course remain. Deals were done right up until the Brexit decision and our Midhurst branch sold a property on the day of the results in the region of £5 million.
“Stamp duty land tax has seriously penalised properties worth £1 million plus, with the pain amplified the higher up the scale you go, and properties worth £2 million or more often need to be discounted to reflect the higher stamp duty costs. There are exceptions however and our Burnham Market office sold a number of barn conversions recently on the Holkham Estate ranging from £950,000 to £1.4 million – every one of them was sold to second home owners from London. The Chancellor’s recent 3% stamp duty surcharge on stamp duty on second homes applied to the £1.4 million property was £42,000!
“More localised factors show pretty market towns with good transport links commanding premiums. Great views and tranquil locations help a property to achieve good prices – showing that quality sells.”
London Residential Development
National housebuilders are returning to their roots and the focus in the capital has moved from large, prime and inner London sites, to be replaced with a focus on more affordable locations. Demand for prime London sites has depleted in the last 12 months – and those wanting to invest in prime property will be chasing an asset in increasingly short supply. The EU referendum has had a resounding impact on the capital’s residential development market but it is impossible to tell what the full impact of this will be at the present time.
- Construction starts in the capital in Q1 2016 down by approximately 40%, compared to Q1 2015
- Sales in prime London markets down by 47% BUT outer London sales up 38% in the same period
- JSS predicts that construction starts will continue to be curtailed for Q2 and Q3, as the development pipeline caters for a reduction in short-medium term demand
Ben Babington, Director:“The residential property market has clearly felt the impact of the recent EU referendum, but there is a considerable amount of change on the horizon for the entire UK as we negotiate our path forward outside the EU. The market in 2015 and across 2016 has been very favourable to the ‘man on the street’ so far, an important demographic who have found themselves playing second fiddle to the might of international investors in recent years, and the key life decisions that drive these people to buy will remain unchanged.
“Most residential developers in London identified this shift in market dynamics some time ago and their strategic decisions made over the last few quarters, will actually stand us all in good stead for the months and years ahead.
“Despite the sticking points in the market we believe that London will continue to top the list of the top 10 most important cities for investors for a diverse range of reasons. During the 2008 economic crash London remained a beacon for global investment and this reputation will get us through these turbulent times.”
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