The national figures for the UK, England and Wales show that property price growth has softened since May. This suggests that the continued slowdown and slight drop back in prices shown in some indices isn’t Brexit related, but more due to the time of year and the forecasted fall back in pressure on purchases and therefore prices, that followed the huge surge in the market in the first quarter of the year as those that could, avoided the 3 per cent stamp duty increase on second homes. First time buyers certainly held their own according the NAEA as “a third of total house sales in June were made to FTBs” – the highest number of sales since October 2015.

UK COUNTRIES

The statistics for the UK countries show that England is performing well now and most regions have seen property prices recover beyond the pre-credit crunch heights – albeit partly thanks to the new UK HPI government statistics which replaced the Land Registry, ONS and ROS figures.

However, Wales and Scotland still have a little way to go, while Northern Ireland could take another eight years to recover based on current year on year growth – perhaps showing one of the first true property price bubbles in the UK, especially if some properties aren’t able to recover even by then, which will be nearly 17 years or two decades since the credit crunch hit.

CITIES AND MAJOR TOWNS

Peterborough has joined the top five areas of high growth, which isn’t a surprise as it’s on the doorstep of London and Cambridge, and just 45 minutes from the Capital. Strong economic growth has helped power houses such as Bristol, Milton Keynes and Reading to replicate the growth London boroughs have seen over the last few years.

Areas which have the space to build new homes, such as Lincoln and Liverpool have seen less growth over time, but are still moving forward and, overall, suggesting a healthy market for both buyers and sellers. For London boroughs, we are now seeing the outer areas expand at the same rate as inner London has in the past, while the inner areas are now seeing slight falls or slower growth. Time will tell if this is a short term ‘blip’ or a sign that the amazing price growth seen over the last 20 years is finally coming to an end.

TRANSACTIONS, DEMAND AND SUPPLY

Despite current volumes from April through to June being 20 per cent lower than last year, LSL says, “…looking at the first six months of each year, we estimate that overall transactions are some four per cent higher in 2016 than 2015,” which is good news cumulatively from an agency perspective, however clearly volumes may not feel that rosy in the aftermath of the government’s stamp duty change.

This is reflected in both the NAEA and RICS indices which both show existing stock levels and new vendor instructions on the slide while the RICS has also seen a fall in buyers, NAEA reports a nine per cent month on month increase. Meanwhile though, new stock is coming through from developers, with NHBC saying Q2 16 was the strongest they have seen since Q4 2007 just as the crash started to impact.

NEW BUILDS AND PROPERTIES FOR SALE

During Q2 2016, the number of NHBC new home registrations was 41,222, a 1 per cent increase on the same period last year (40,931);

• 31,753 were registered in the private sector, 6 per cent increase compared to last year (30,086)
• 9,469 were registered in the public sector, -10 per cent decrease compared to last year (10,845).

NHBC says, “These registrations reflect continued industry confidence in the run-up to the EU Referendum at the end of June. Indeed, this period was the strongest quarter since Q4 2007, albeit still some way off levels seen over a decade ago.”

THE BREXIT EFFECT

The big question everyone is asking is will Brexit impact the property market?

In the main, most indices are reporting that it’s too early to tell what the main impact will be and for now, the research is giving mixed messages.

Rightmove gives a good lead indicator of the impact, as it’s one of the first places buyers come to and sellers appear on.

Their view is, “The summary so far based on two weeks of post-Brexit-vote statistics is that the housing market remains steady, underpinned by the same fundamentals that have led to its recovery since the last downturn.”

Nationwide, one of the UK’s biggest lenders suggest that, “It will be tempting for commentators to assign any trends in the coming months to the impact of the referendum. Housing market transactions were always likely to soften over the summer after the surge in activity in March, as buyers brought forward purchases of second homes to avoid the stamp duty levy, which took effect in April. Determining how much of any fall-back in activity is the result of the tax changes and how much is due to the referendum will be difficult.”

Until the economic outlook becomes more certain, we cannot see why aspirational purchasers would participate in the current market.

Their confidence index does show however that the uncertainty over what happens next in the economy… “may lead to weaker demand for homes. Leading indicators are consistent with softening ahead.”

RICS provides a useful insight to the market post the Brexit vote. Firstly they report that, “instantly following the Brexit result, three in five (57 per cent) reported a drop in demand from prospective buyers and three in five (58 per cent) saw supply fall in the week immediately following the vote.”

Reports by their agents suggest that, “activity has picked up after an initial wobble, while others cite the Brexit vote as having only a modest or even negligible impact thus far.”

The best and to some extent most comprehensive insight from the RICS is the market comments at the end of the index from their surveyors, all of which show there is a mixed picture when it comes to the impact of Brexit.

RICS AGENTS’ MARKET COMMENTS

Douglas Farmer, Hopes Auction, Wigton: “Hiding behind Brexit is easy but there is still an air of uncertainty in the market.”

Simon Bainbridge, Savills, Darlington: “After some uncertainty post Brexit, the market has settled and some confidence is returning.”

Simon Croft, Feather Smailes Scales, Harrogate: “Brexit has made no difference to the market in this area.”

Martin Pendered, Martin Pendered & Co, Wellingborough: “The impact of the referendum has been much less than expected, but this may be disguised by the holiday period but indications are that the market is still buoyant.”

Mike Arthan, Barbers, Shropshire: “July activity levels better than expected after Brexit vote.”

Richard Franklin, Franklin Gallimore, Tenbury Wells: “Stock levels low and inertia following Brexit are key features. Until the economic outlook becomes more certain, we cannot see why aspirational purchasers would participate in the current market.”

Guy Gowing, Arnolds Keys, Norfolk: “The immediate aftermath of the Brexit decision caused huge uncertainty and panic, however since the appointment of our new Prime Minister calm has been restored and its business as normal.”

Andrew Morgan, Morgan & Davies, Lampeter: “We expected less activity post Brexit result but to the contrary, the market has accepted this, with lifestyle buyers leading the charge to rural Wales.”

Kevin Ryan, Carter Jonas, Mayfair: “SDLT, ATED (Annual Tax on Enveloped Dwellings), the Brexit vote and the holiday period have combined to create the perfect storm of inactivity.”

DATA EXPERTS’ VIEWS

Both LSL Acadata and Hometrack housing experts agree that it’s too early to tell what will happen, with LSL saying, “There’s consensus in the housing market over Brexit: it’s still too early to tell what the long-term impact will be. While the vote to leave has definitely resulted in uncertainty, there’s near unanimity among commentators that the impact is yet to show in the figures, external commentaries and the LSL Acadata HPI data suggest that any slowdown is unlikely to be of the scale suggested by HM Treasury in the run up to the vote.”

Hometrack concludes, “It is still very early days to assess the true impact of the EU referendum vote on activity and house prices. Hometrack’s view, based on our Cities Index and analysis of listings data, remains that sales volumes are likely to slow and price growth will moderate over the second half of the year.”

AND FINALLY

What’s happening to property prices for individual buyers in the property market?

Currently in England, first time buyers pay the least – an average of £191,099 (don’t forget, this is completely skewed by London) and in Wales for example they are paying an average of just over £123,000.

Cash buyers are typically paying £212,618 while new build buyers pay the most at £293,461, however, they don’t typically carry out any renovation and would expect to have lower maintenance costs versus buying a second home, and potentially have even lower running costs if the energy efficiency is greater.