Supply and demand in UK property market remains broadly unchanged, despite Brexit
The estate agency says the full impact of Brexit will become apparent by autumn this year.
On the day the Brexit decision was announced, Jackson-Stops & Staff analysed over 750,00 properties for sale in the UK (over 90% of the UK total) which revealed that 41.5% of properties on the market at that point were already under offer. The same analysis undertaken on 6 July revealed 39.9% of properties for sale were under offer; the proportion is largely unchanged, indicating that the forces driving decisions to buy and sell remain unaffected. In addition, the number of properties on the market has increased by more than 21,000 since the Brexit decision.
Nick Leeming, Jackson-Stops & Staff chairman, provides an overview: “Despite the upheaval following the Brexit decision the level of demand vs. supply has remained broadly static UK-wide, showing that in the short term buyers and sellers are still being driven by the normal catalysts for entering the property market. The true impact of the Brexit decision will only become apparent in around autumn, once we have navigated through the normally quieter summer months and a new prime minister is in place. There could even be some emerging positives in this time – lower interest rates may mean enhanced affordability and our central London offices might benefit from the favourable exchange rate encouraging international buyers. The last couple of weeks has shown us that life goes on for the UK property market. However, the endemic problem remains – the UK economy is blighted by an undersupply of homes and the government must not allow the upheaval of Brexit to wholly divert its attentions away from this central issue.”
Country house market
“The Brexit decision will not negatively impact prices in the country property market because it does not detract from the pent-up UK housing market demand – stamp duty, on the other hand, has seriously impacted the market in homes worth over £1m,” says Tim Dansie, director at Jackson-Stops & Staff.
Tim Dansie comments: “While dented consumer confidence will cause a slow-down in activity over the rest of the summer, the life decisions that encourage people to buy and sell property will of course remain. Deals were done right up until the Brexit decision and our Midhurst branch sold a property on the day of the results in the region of £5m.
“Stamp duty land tax has seriously penalised properties worth £1m plus, with the pain amplified the higher up the scale you go, and properties worth £2m or more often need to be discounted to reflect the higher stamp duty costs. There are exceptions however and our Burnham Market office sold a number of barn conversions recently on the Holkham Estate ranging from £950,000 to £1.4m – every one of them was sold to second home owners from London. The Chancellor’s recent 3% stamp duty surcharge on stamp duty on second homes applied to the £1.4m property was £42,000!
“More localised factors show pretty market towns with good transport links commanding premiums. Great views and tranquil locations help a property to achieve good prices – showing that quality sells.”
Residential development, London
National housebuilders are returning to their roots and the focus in the capital has moved from large, prime and inner London sites, to be replaced with a focus on more affordable locations, according to Ben Babington, director of residential development at Jackson-Stops & Staff. Demand for prime London sites has depleted in the last 12 months – and those wanting to invest in prime property will be chasing an asset in increasingly short supply. The EU referendum has had a resounding impact on the capital’s residential development market but it is impossible to tell what the full impact of this will be at the present time.
Ben Babington comments: “The residential property market has clearly felt the impact of the recent EU referendum, but there is a considerable amount of change on the horizon for the entire UK as we negotiate our path forward outside the EU. The market in 2015 and across 2016 has been very favourable to the ‘man on the street’ so far, an important demographic who have found themselves playing second fiddle to the might of international investors in recent years, and the key life decisions that drive these people to buy will remain unchanged.
“Most residential developers in London identified this shift in market dynamics some time ago and their strategic decisions made over the last few quarters, will actually stand us all in good stead for the months and years ahead.
“Despite the sticking points in the market we believe that London will continue to top the list of the top 10 most important cities for investors for a diverse range of reasons. During the 2008 economic crash London remained a beacon for global investment and this reputation will get us through these turbulent times.”