Housing demand still strong
In a recent trading update, Taylor Wimpey, Britain’s third largest housebuilder, reported that sales and cancellations following the 23 June referendum were relatively unchanged from the previous year.
Despite experiencing a brief faltering of demand immediately after the vote, Taylor Wimpey reports business has picked up to normal levels and that the mainstream UK housing market has remained buoyant as potential buyers have continued to purchase new homes. The company believes the market’s long- term health is underpinned by strong demand.
Contrary to strength in the mainstream market, prices in some parts of central London have fallen and deals of super prime £10m plus homes have tailed off. Taylor Wimpey reports that in London’s zones one and two, prices have fallen slightly for the highest priced homes but demand remains strong.
Taylor Wimpey’s Chief Executive, Pete Redfern commented:
“Trading during the second half of 2016 and into the autumn selling season has been strong. While there remains some uncertainty following the UK’s vote to leave the EU, we are encouraged to see that the housing market has remained robust and trading has remained resilient.”
Low stock levels influencing prices
The Royal Institution of Chartered Surveyors (RICS) monthly Residential Market Survey of October reports that new buyer enquiries have increased for the second month running, but that there has been a further fall in new instructions.
Chief Economist at RICS Simon Rubinsohn, commented on the lack of housing stock: “The dire shortage of available housing across the UK is continuing to push prices upwards, regardless of the uncertainty linked to the ongoing discussions surrounding Brexit.”
Nationally, over a third (37%) of respondents to the survey believe their local markets are over-priced relative to economic fundamentals. A far higher proportion (61%) believe that current prices are around fair value. Half of surveyors in London and 69% of surveyors in the south-east of England agree that homes in those regions are currently overvalued.
Expectations for price growth over the next three months edged higher in October with a net balance of 18% of contributors anticipating a rise, an increase from 15% in September. National price growth expectations are now positive in all areas except London, where surveyors expect prices to remain flat in the short term.
In the next quarter more respondents in every area of the UK said that they expect the number of homes sold to increase rather than decrease. Focussing on a longer term perspective, the majority of those polled expect the level of transactions to rise in the next 12 months.
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Please note: Our monthly property market review is intended to provide background to recent developments in the residential property market as well as to give an indication of how some key issues could impact in the future. We are not responsible or authorised to provide advice on investment decisions concerning property, only for the provision of mortgage advice.