With the UK due to exit the European Union on 29th March, there is plenty of speculation on the impact of Brexit on the economy and the housing market. Whatever happens in a month, though, it will likely mean the end of an extended period of uncertainty – the anathema of business – and there are plenty of positive signs already on display.
Although economic growth was just 0.2% in the last quarter of 2018, employment hit a record high, with 75.8% of people aged 16-64 in work. Inflation has also fallen, to 1.8%, and is likely to remain below the government’s 2% target if a Brexit deal is secured.
Alongside these positive trends, transaction levels have risen, with 101,170 taking place in January 2019. This is an increase of 1.3% on the same month last year, and is the highest monthly total since November 2017. According to Hometrack, in 12 of the top 20 cities of the UK the time to sell is generally below ten weeks.
A recent survey of tenants has indicated that transaction levels could increase further over the next two years. 58% of tenants stated that they intend to buy a property in the future, and 26.5% of these said that they would do so within two years. This would mean an additional 640,000 first-time buyers joining the market – 320,000 per year – which, given that only around 800,000 transactions took place in the whole of last year, represents a massive potential uplift.
The rental sector has continued its strong start to the new year. In the year to January 2019, average rents rose 1% nationwide, and are expected to rise by an additional 2% over the next twelve months.
A major contributing factor towards rising rents in recent times has been a reduction in the number of available properties, as buy-to-let lenders have been issuing fewer loans. In the twelve months to November 2018, almost 10,000 fewer loans were issued to buy-to-let investors – a reduction of 12.6%.
An interesting trend being noticed in the sector recently is the increasing number of families renting property. Traditionally, singles, couples and groups of sharers have been by far the most common tenants, but in the year to January 2019, nearly a quarter of new tenancies started include children – a 37% rise since the beginning of the decade.
A possible reason for this is that many couples are finding that they are not able to afford to buy a property before they start a family. The average age of a first-time buyer in England is now 34, and many couples do not want to wait this long before having children. Consequently, the market has seen an increase in demand for larger rental properties, which are increasingly becoming excellent investments for landlords.