Spring has officially sprung, with the season beginning on the 20th March. This has traditionally been the busiest time of year for agents: over the last five years, more viewings are carried out in March than in any other month, with May and April following in second and third place.
This spring is likely to be no different. Although the approaching deadline for the UK’s withdrawal from the EU was expected to reduce buyer activity this spring, early indications are showing that demand might be as subdued. In the first two months of 2019, viewing levels were just 4% below the average recorded over the last five years.
This indication is supported by the transaction volumes witnessed in February. 101,780 transactions took place, an increase of 2.7% on the same month last year. This suggests that serious buyers are still in the market despite the uncertainty surrounding the country’s future.
This uncertainty has dominated conversations about the housing market since the referendum in 2016, and agents across the country have cited it as their greatest challenge. It has also contributed to the second largest problem facing agents at the moment – a lack of stock – as many potential movers are waiting until the outcome is decided before bringing their property to the market.
As we draw nearer to the end of this uncertainty – one way or another – many of these people will start moving again. Rightmove has reported that search activity on their site has not fallen, which indicates that people are keeping an eye out for opportunities and will be ready to move when the uncertainty of Brexit ends.
Many of these buyers will be pleased to hear that the House of Commons’ Committee on Leasehold Reform have been advocating a shift from leasehold to commonhold property tenure, and for a cap of £250 per annum to be applied to ground rents. These measures will make purchasing more attractive, especially for the first-time buyers who tend to be most interested in smaller flats, which are almost invariably leaseholds.
Consequently, the Office for Budget Responsibility (OBR) have forecast that by 2021, house prices will be rising by as much as 4%.
The lettings market does not appear to have been affected by recent changes to the Brexit situation, and remains strong. Average rents nationwide have continued to rise by a steady 1.1%, fed by an imbalance in the supply and demand for rental property. This shows no sign of abating: in February it was reported that tenant demand rose while instructions fell for the 29th consecutive month.
This rise may be further impacted by government policy, as the Treasury is set to consult on an additional 1% Stamp Duty surcharge for non-resident buyers. This may discourage overseas landlords from investing further in UK property, ensuring that supply of rental property remains lower than demand and further increasing rental yield for those landlords who are able to bring their properties to the market.
As a result, rents are anticipated to rise again over the next quarter.
|This is part of our series of Market Updates. You can read the other 2019 updates here:||January - February - March|