Bank of England says housing transactions 'resilient' despite Brexit

The Bank of England says there has been a dip in the housing market activity after the Brexit referendum result - but transactions have so far proved to be “resilient” and stronger than some expected.

In a broad-ranging report on the economy since June 23 - the first of the Bank’s monthly surveys since the Brexit decision - little evidence was found that investment decisions and wider economic activity had slowed.

“There had been little evidence of any impact on consumer spending on services and non-durable goods, although there were some reports of consumers becoming more hesitant around purchases of higher-value goods.”

The Bank of England said its regional agents across the UK had noticed a “business as usual” response by most companies, despite the initial shock at the referendum result.

“The majority of firms spoken with did not expect a near-term impact from the referendum result on their capital spending. But around one third expected some negative effects over the next 12 months, with reports of a ‘risk off’ approach to expenditures and some imminent plans for spending slipping” says the report.

Former RICS residential chairman and north London estate agent Jeremy Leaf responded to the BoE report by saying that “on the ground we have seen determination on behalf of people to negotiate hard and a new sense of realism emerge.” 

https://www.estateagenttoday.co.uk/breaking-news/2016/7/bank-of-england-says-housing-transactions-resilient-despite-brexit

If you are a landlord or thinking of becoming one for the first time and you want to read more articles like this about the Southampton Property Market, together with regular postings on what I consider the best buy to let deals in Southampton (out of the many of properties on the market, irrespective of which agent is selling it) then feel free to get in touch.

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Rightmove: Asking prices dip but it's down to summer, not Brexit

Rightmove’s latest house price index, covering two weeks either side of the EU referendum at the end of June, suggests average asking prices have dipped by 0.9 per cent.

But the portal stresses that this fall - equivalent to £2,647 on a typical asking price - is seasonal, not Brexit-inspired. Since 2010 the month of July has recorded average price falls of 0.4 per cent so this dip is bigger, although not worryingly so.

“Political turbulence has a track record of unsettling sentiment. Indeed last year saw a seasonally unusual 0.1 per cent fall in the run up to the May election, and a June and July price surge as a result of the post-election boost” says Miles Shipside, Rightmove director and housing market analyst. 

In the two weeks immediately after the EU referendum, compared to the same fortnight in 2015, enquiries to agents from buyers were down by 16 per cent.  However, last year’s figures were boosted by pent-up demand after the surprise general election result, which saw a 25 per cent uplift in buyer enquiries in June and July compared to the same two-month period in 2014.

Buyer enquiry levels in the two weeks after the Brexit vote are now consistent with the same period in 2014, which is a more comparable benchmark.

“Agents in areas where stock shortages were driving momentum before the referendum say activity has recovered quickly, with buyers’ fear of losing a scarce property a key factor. They say that very few deals have fallen through as a direct result of post-Brexit jitters. Those areas of the country whose housing markets were struggling or readjusting earlier in the year, such as parts of London, will continue on what is often a fairly lengthy path of price reductions to encourage buyers to return in numbers” says Shipside.

Encouragingly, instruction numbers are up - ahead even of this time last year. 

“The two weeks before the Brexit vote saw the number of properties coming to market down by eight per cent, though the two weeks afterwards have now seen the levels up by six per cent” he says. 

https://www.estateagenttoday.co.uk/breaking-news/2016/7/rightmove-asking-prices-dip-but-its-down-to-summer-not-brexit

New government must act quickly to tackle the Housing Crises

The House of Lords’ Economic Affairs Committee has strongly recommended the government lift its target by 50 per cent and build 300,000 homes each year in order to tackle the housing crisis. In a report published last week by the cross-party group criticised current housing policy for setting a new homes target which will fail to meet the demand for new homes or moderate the rate of house price increases.

It also took issue with the government restricting local authorities’ access to funding to build more social housing and a narrow focus on home ownership which neglects those who rent their home.

Finally, the committee raised the issue of frequent changes to tax rules, subsidies for house purchases, reductions in social rents, and the extension of the Right to Buy all creating uncertainty in an “already dysfunctional housing market”.

The report therefore recommended lifting restraints on local authority borrowing to fund social housebuilding and resume their historic role as one of the major builders of new homes.

It suggested council tax should be charged on developments that are not completed quickly, stating the government’s reliance on private developers to meet its target of new homes is “misguided”.

The report called the private sector housebuilding market “oligopolistic”, with the eight largest builders building half of all new homes on a business model “restricting the volume of housebuilding to maximise their profit margin”.

The government must also take decisive steps to build on the “very substantial” holdings of surplus publicly owned land, with the National Infrastructure Commission deemed best to oversee this process, it said.

“Local authorities should be given the power to increase planning fees,” the report added, suggesting local authorities should be able to set and vary planning fees to help fund a more efficient planning system, with the upper cap on these charges set much higher than the current limit.

Lord Hollick, chairman of the committee, said the only way to face the acute housing crisis is to increase supply.

“The country needs to build 300,000 homes a year for the foreseeable future. The private sector alone cannot deliver that. It has neither the ability nor motivation to do so; we need local government and housing associations to get back into the business of building,” he stated.

“The government are too focused on home ownership which will never be achievable for a great many people and in some areas it will be out of reach even for those on average incomes.”

He also called it “very concerning” that changes to stamp duty for landlords and cuts to social rent could reduce the availability of homes for rent.

The Residential Landlords Association picked up these points and called on the new government to drop its predecessor’s attacks on the buy-to-let market and ensure that the tax and planning systems encourage individual landlords to invest in new properties.

Alan Ward, chairman of the RLA, argued corporate investors are simply failing to develop the required homes to rent.

“The vast majority of landlords are individuals, renting out just a few properties,” he stated. “With the right planning and tax policies, they are ideally placed to invest in new homes to rent and to make better use of the country’s existing housing stock, including converting large properties into more useable smaller units of accommodation.”

The full report is available here: http://www.publications.parliament.uk/pa/ld201617/ldselect/ldeconaf/20/20.pdf

http://www.ftadviser.com/2016/07/15/mortgages/lords-demand-new-gov-t-acts-quickly-to-tackle-housing-crisis-Q47YoCDbHpRab6pSYKD3bK/article-1.html

Annual House Price Growth eases to 8.4% in June 16

The latest Halifax House Price index has just been released and it's key findings are:

• Prices in the 3 months to June were 8.4% higher than in the same period of 2015. This was down from 9.2% in May and was the lowest since July 2015 (7.8%)
• House prices in the last 3 months to June 16 were 1.2% higher than in the preceding 3 months. This was slightly below Mays 1.5% increase and was the lowest rise since December 2014 (1%)
• Home sales stabilised in May. There was a surge of activity on the run up to March with the stamp duty changes and in May 89,700 completions took place up 1.5% on April. However this is still well below the six month average which amounts to 106,750.

The full report is available here
http://static.halifax.co.uk/assets/pdf/mortgages/pdf/June-2016-House-Price-Index.pdf

Southampton Take two!! Two houses on the same road and £50k price difference

Here we have two properties on the market on the same street in Weston Southampton. One has been refurbished and is on the market at £180k. We let the next door unit at £875pcm and the yield is good at 5.8% based on asking price. It is a lovely unit and will let well.

On the other hand if you fancy getting your hands dirty you could have a look at this unit. It needs a complete refit but is on the market at £130k and could be bought for less I'd imagine. Once refurbed it will let well just like the above unit.

Both these units would make good buy 2 lets and given where the market is at post Brexit I think they could offer good value as well.