House prices: ‘Summer surge’ property market as buyers purchase before Brexit
Property search website Rightmove’s latest house price index indicates that all regions in the UK saw a year on year rise in the number of sales agreed over the last month, with overall numbers up by 6.1 per cent on the same period in 2018. There were some stand out performers though, as the North East saw an increase of 13.6 per cent, the East of England a rise of 12.7 per cent and Yorkshire and the Humber saw the number of sales agreed increasing annually by 10.1 per cent. However, Rightmove also suggests that whilst deals are being agreed, there is a significant backlog in terms of the legal system, with the number of properties sold subject to contract but awaiting completion currently at its highest for five years. This is significantly increasing overall times from sales agreed to completion around the country, particularly if transactions are part of a chain.
More prospective movers are taking the plunge, getting stuck into deals with sellers more willing to lower their price expectations, and lenders wanting to lend and offering low rates
As far as asking prices are concerned, it’s quite normal for prices to reduce slightly over the summer months.
This is usually due vendors being more motivated to move; generally, in the case of families, because they are aiming to complete their transaction during the school holidays.
The ‘seasonal’ effect has been observed again this year, albeit as a decrease of just one per cent, equating to an average reduction of £3,192.
By comparison, at the same point last year, asking prices reduced by 2.3 per cent, indicating that the increased level of demand this summer is providing a level of support for prices in most areas of the UK.
So, why the pre-Brexit sales spree? Miles Shipside, Rightmove director and housing market analyst suggested: “Whilst another approaching Brexit deadline is now nothing new for prospective buyers, this one may seem more definite, and therefore one to beat, with the Government regarding this one as ‘do or die’.
House prices: Rightmove data shows a “summer surge” as buyers rush to complete before Brexit
“While the end of October Brexit outcome remains uncertain, more buyers are now going for the certainty of doing a deal, with some having perhaps hesitated earlier in the year.”
Miles continued: “More prospective movers are taking the plunge, getting stuck into deals with sellers more willing to lower their price expectations, and lenders wanting to lend and offering low rates.
“There’s only so long that buyers and sellers can delay the familial, financial and emotional forces driving the need to move, and with the average time between agreeing a sale and moving in being more than three months, we’re now entering the last chance saloon for those who want to have finished their move before the end of the year.
“We often see an autumn activity bounce, but perhaps this year’s political activities have brought that forward into a summer surge as buyers have gone bolder and earlier than usual.”
Jeremy Leaf, former RICS residential chairman, observed: “Although based on asking prices, the Rightmove numbers always prove a useful and more up-to-date indicator of market strengths, with sales agreed numbers always particularly interesting.
“The figures confirm what we are seeing at the coalface, which is that while caution and uncertainty remain in some quarters, demand cannot remain pent-up indefinitely.
“Buyers are looking beyond Brexit and taking advantage of improving affordability, softening prices and greater realism among sellers.
“However, the slow pace and length of transactions, as well as the fragile nature of some elements of chains, continues to cause frustration.”
Glynis Frew, CEO of estate agency Hunters, added: “There is little doubt that the market continues to face its inevitable challenges, yet the results also appear to reflect a heightened sense of urgency in some respects.
“That’s especially the case when you consider that August has historically been a bit of a quieter time for the housing market.
“Many vendors at this moment in time seem happy to demand slightly lower asking prices if it means they can get the deal out the door as quickly as possible in light of the ongoing Brexit uncertainty.”
There is another factor that may be uppermost in buyer’s minds currently, which is the possibility of stamp duty reform.
Over the past couple of months there have been suggestions that Boris Johnson was considering switching the liability from buyer to seller in what would have been the most radical overhaul of the system for decades, although Chancellor Sajid Javid took to Twitter over the weekend to dispel rumours that this could be the case.
That said, there does appear to be a growing momentum towards a degree of change around the amount of tax paid on property transactions.
With the right strategy, any such movements would provide more support for affordability-stretched buyers, and indeed the UK property market overall, and could create a ‘post-Brexit-Bounce’ this autumn.
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