In wake of the Brexit vote, many experts have been publishing market reports and forecasts for the year ahead, with the likes of Knight Frank, Countrywide and Halifax, all indicating a fall in house prices. Lower prices tend to breed uncertainty among buyers, however, they can in fact be an excellent opportunity to access greater lending and receive more return from your investment.
Although many anticipated Brexit would have a negative effect on the market and economy as a whole, the market is currently showing no signs of recession, with a slight drop in figures simply reflecting the seasonal lull we would expect at this time of year.
Overall, the market is still liquid, with a large amount of uncertainty down to negative press and rumour. Mortgage deals are lucrative with some of the lowest rates on record being released, which show no sign of slowing.
Has Brexit affected house prices?
Halifax has stated prices fell between June and July, while Rightmove claimed asking prices in London fell by 2.6% over the past month. 70% of London postcodes have supposedly seen reduced asking prices compared to just 30% increasing. Countrywide also forecast a 1% fall in house prices next year, expecting growth to slow until a 2% recovery in 2018.
Yet, these figures have all been released during a notoriously quiet time and are based on the company’s own data and estimates, without taking every significant factor into account. Aside from Brexit, how will the buy to let tax changes impact the market? Having published a consultation paper on new minimum underwriting standards for buy to lets in March 2016, the results from the Prudential Regulation Authority are due in September and set to further change rental calculations, making the market increasingly challenging for landlords.
House prices are generally based on confidence, so with any ounce of uncertainty from buyers, demand will drop and prices will follow. However, it is far too early for any reports to be twinned with Brexit. Prices will naturally fall in August as the majority choose jetting off on holiday over buying a house – so it will be a few months before we know the real fallout from Brexit, if any.
The future of the property market
Essentially now is a fantastic time to borrow, especially for the buy to let sector, which is soon to be rocked by changes from the PRA. Gross mortgage lending remained 6% higher in July on an annual basis (according to the British Bankers Association), so there is still a positive feeling in the market all-round.
Although rising inflation and the weakening pound may result in a rate rise in the future, lenders are extremely keen to lend, especially for those with access to equity. We at Enness are still experiencing significant enquiries as a result, despite August usually being a predictably quiet month. We would encourage any client seeking finance to do so now while some of the best offers on record are available.
If you’re unsure how to tackle the current market, we are here to reassure you and answer any questions you may have. Our expert advisers are on hand anytime to help – no matter how complex your circumstances are.