UK housing market: buying, renting & Brexit
The ongoing economic uncertainty continues to impact the UK housing market. With the market stagnant and subdued amid the Brexit saga, some statistics indicate that the growth in house prices has slowed to their lowest since the 2008 financial crisis. Most surveys suggest that the September and October property market almost ground to a halt! Some may not see this as overly surprising as the country approached the now-defunct 31 October Brexit deadline.
Whilst first time buyers will welcome the current market conditions; the bleak reality is unfortunate: the market is far from consistent across the UK, (especially in London where prices continue to be above the national average), many first time buyers continue to face difficulties in securing finance and the availability of properties meeting buyer’s requirements are difficult to find.
The increase to a 12% stamp duty has also impacted the market. Retirees looking to downsize are finding it harder to sell their properties due to the additional financial burden, which is causing a knock-on effect to the availability of affordable family-sized homes.
From the seller’s perspective, many sellers are preferring to wait for more certainty around Brexit and their ability to meet their target price.
With the buying market in its current state, it is of little surprise that many people continue to look to the rental market.
Changing face of the UK rental market
Here, the government’s Family Resources Survey, provides some interesting insights:
Unsurprisingly, there is a clear pattern in the ‘life cycle’ of occupying property, with younger households (16-34 year olds) more likely to rent from private landlords, 35-55 year olds more likely to own a mortgaged property whilst the 55+ age group are more likely to own their property outright.
However, there has been a clear shift in the percentage mix of households renting/owning property compared to 10 years earlier. For almost all age groups, the percentage of households renting privately have increased, with the 16-34 year olds making up the largest increase (around 30%). Conversely, the percentage of households either owning a property outright or with a mortgage have decreased across all age groups below the 65+ group.
This is reflected in the market with several UK cities having recorded a rise in rent at a rate faster than the average, with Leeds and Bristol rising faster than the UK average wage growth. As with the property market, London remains the most expensive city to rent, with nearly a third of UK rental properties found in the city.
Following the EU’s agreement to a ‘flextension’ from the 31 October Brexit deadline, all eyes turn to the latest twist in this ongoing saga, a general election in early December. This brings with it a ‘new uncertainty’ – who will occupy No. 10 post election and what policies will they bring with them?
Whilst Brexit has resulted in a stagnant market, the general election may kick-start the property market into action (in the short term at least), with many sellers and buyers preferring to act now rather than face the unknown that comes with a new Government.