After Brexit fears, confidence returning to UK market

Against fears of a slump in the UK property market  following the historic  decision to leave the European Union, confidence is gradually returning to the once burgeoning market.

Close watchers of the market observed a couple of weeks back an interesting residential property market with “more evidence that the predicted hit expected from the decision to leave the European Union has been more of a mild drizzle than a deluge or flood”.

“Confidence is returning with the market seeing an upturn”, reports Property Wire, an online platform that monitors over 100 residential markets worldwide, quoting  the latest monthly report from the Royal Institution of Chartered Surveyors (RICS) which is considered important benchmark for what is happening in the sector.

Overall, house price rises are regaining some momentum and sales are holding steady after some falls and, even though the Halifax index showed a 0.2 percent fall, it still showed annual growth of almost 7 percent and there is often a slight lull in the third quarter of the year due to the summer holidays.

Ray Clancy, editor, Property Wire, notes in the latest edition of their newsletter that while the RICS survey report points out that buyer enquiries and sales instructions continue to slip albeit at a greatly reduced pace, surveyors expect that prices and sales volumes will rise going forward not just in the next few months but over the next 12 months.

“It is also good news that RICS says that the market is likely to benefit from a more stable trend in activity which is driving the improvement in sentiment. But there are, of course, regional differences, with London in particular remaining negative for a sixth consecutive month”, he says.

According to him, landlords in the country have not been put off by tax changes, also quoting  the latest report from Connells Survey and Valuation which says that buy-to-let activity increased by 12.7 percent recently,  suggesting that the sector has successfully absorbed the Government’s 2015 policy changes and even enjoyed a post Brexit bounce.

Although the restriction of tax relief on mortgage finance costs to basic rate tax only, the removal of the 10 percent wear and tear allowance, and the introduction of additional 3 percent stamp duty surcharge hit the sector following the 2015 budget and the last Autumn statement, but the report explains that the August rebound suggests the government’s changes are set to have been a short term problem for the sector.

All of this has been helped by the cut in interest rates. It is only a matter of months ago that everyone was expecting a rise in rates but the Brexit vote has put paid to that. It means that it is still cheap to get a mortgage and that is helping first time buyers and so keeping the market moving.

There is also an encouraging economic outlook, high levels of employment and fading fears of a recession and even in London it is not all doom and gloom. The latest report from Knight Frank on the prime market suggests that buyers are returning, with a 22.1 percent rise in interest compared to a year ago.