With the latest figures released by both the CML (council of mortgage lenders) and Government land registry, this data provides the first real snapshot of what the UK property market looks like post brexit. Before these figures, journalists and commentators had to run articles based on a combination of speculation and hype, focusing on the Chancellors doom and gloom rhetoric during the brexit debate.
So, now we have some actual data to analyse and digest, what is the reality of the UK property market post brexit result ?
The CML data indicates that the property market is much more robust than was first thought:
- Home-owners borrowed £34.3bn for house purchase, up 16% quarter-on-quarter and 1% year-on-year. They took out 187,200 loans, up 12% on the second quarter but down 1% on the third quarter 2015.
- First-time buyers borrowed £14.5bn, up 8% on the second quarter and 12% on the third quarter last year. This equated to 91,600 loans, up 7% quarter-on-quarter and 8% year-on-year.
- Home movers borrowed £19.8bn, up 22% on the last quarter but down 6% compared to a year ago. This represented 95,600 loans, up 17% quarter-on-quarter but down 8% on the same quarter in 2015.
- Remortgage activity totalled £17.5bn, up 5% on the second quarter and 22% on the same quarter a year ago. This came to 100,100 loans, up 3% quarter-on-quarter and 16% compared to a year ago.
- Landlords borrowed £8.8bn, up 10% quarter-on-quarter but down 19% year-on-year. This came to 56,200 loans in total, up 9% compared to the second quarter but down 24% compared to the third quarter in 2015.
The data is clear in every main indicator; home lending increased in the quarter immediately following the brexit result. This confounds the theories that a brexit vote would lead to a 20% drop in house prices and a slump in activity the UK.
In terms of house prices, the Government land registry data illustrates that to September 2016, there has been an average rise in house prices of 7.7% compared with last year. This positive rise has shown how resilient the UK property market really is.
Average monthly price by property type
|Property type||September 2016||September 2015||Difference|
|Flat or maisonette||£196,653||£182,638||7.7%|
The property market in the UK is more robust than many people had previously thought. Although there have been major political and economic factors at play throughout 2016, the market has remained resilient despite this upheaval.
It is clear that the economic fundamentals of the UK economy help to bullet proof the property market against changing conditions. With inflation still falling short of the governments own 2% target, historically low interest rates (with increased levels of borrowing), low levels of unemployment and stable FTSE and equity markets, these solid foundations help to counteract even the most profound political and economic events.
Another factor which helps to keep house prices stable is the supply shortage, particularly in the South East, further increasing house prices as buyers continue to compete for the best homes. Whilst the monthly price rises have levelled somewhat, we will continue to see a ‘sellers market’ for the rest of 2016 and in to 2017. With limited property coming to the market in Q4 and some sellers removing their homes from the market for the Christmas period, this effect will be further exacerbated.
Overall, the first real data since brexit has demonstrated the resilience of the UK property market. With strong economic fundamentals and a continued limited supply, the outlook for early 2017 suggests stable, if muted, growth for house prices.
Jason Tebb | CEO and Founder of Ivy Gate Property Group