In many ways 2019 is a great time to be in the market for property. Year-to-date until May, house prices in the UK have risen by 1.2%, making the average property value across the UK £229,431. In May according to The Telegraph, over 120,000 mortgages were issued nationally, and mortgage lending was up 3% overall. Semi-detached and detached houses have proven most popular, with a respective 9% and 7% rise in sales between April and June.
Why are prices increasing?
The main increases can be seen in Wales – with an annual rise of 3% – and Scotland at 2.8%. In England the main increase in asking price has come from further north – specifically the North East. There are a few reasons for this; affordability of property increases as you travel further north, plus demand is a little lower for example.
However, there are other forces at play too. There are many mixed opinions on Britain’s current political situation but if there is one thing people agree on, it is that the government’s ‘Right to Buy’ scheme has had a fundamental impact in helping those from lower income backgrounds to purchase property. When it comes to property exchanges, there has been a 22% growth in the £15,000 – £19,000 income bracket, and an 18% increase in the £30,000 – £39,000 bracket. The average value of sale has fluctuated proportionally to this, with house valued at around £300,000 performing best in the second quarter of 2019.
Considering all income brackets, there has been a 6% rise in property exchanges – a total of 992,000 from March to June 2019. Add into the market a 2% increase in brand-new properties and it is clear the uncertainty of Brexit has not hindered buyers and sellers in pursuing their property goals. Many properties removed from the market are only taken off temporarily – perhaps to switch agents rather than indicate any issue with the move or sale itself.
The London Effect
Despite this positive interaction in the property market, Mike Scott, Chief Property Analyst at Yopa, has warned that growth will slow down over the next few months, eventually leading to a year-on-year standstill.
But how can this be, with much of the UK in a seemingly prosperous position?
There is one major exception to this growth; south-east England, and particularly London. Price changes in this area will be in the red by the end of the year. According to a June article in the Financial Times, the number of Londoners moving out of the capital in 2019 is 80% higher than it was five years ago, making it harder to sell property in the capital.
So, where are these city-dwellers deciding to re-locate to? Areas outside London but crucially still within the commuter belt are reaping the rewards. Richmond-Upon-Thames and St. Albans are both currently topping the rankings of UK property investment hotspots. Taking St. Albans as a case study, Londoners could save an average of £478,000 on their house prices, and in good news for sellers, current predictions are that St. Alban’s property prices will increase by a whopping 38% in the next five years. Rightmove currently states that house prices in St. Albans are 13% higher than 2018 and are significantly higher than the national average; £558,000 vs £221,000.
The Importance of Brexit
It is fair to say that in 2019 the British public have been more preoccupied with politics than usual -specifically the impact of Brexit on their property future. But just how much of a negative impact has the political climate created?
On one hand it is apparent that the six-month extension of the Brexit deadline has had an impact on the number of transactions going through – people are striking while the housing market remains hot. However, this could change rapidly at the end of July with the introduction of a brand-new prime minister, who could have very different views on how the exit from the EU should be structured. But even this may not even be the biggest legislative issue for prospective buyers and sellers – a larger cause for concern is if the new prime minister makes any changes to the stamp duty, which would be a huge blow to anyone seeking to purchase a second property or buy to rent.
For the time being though, it is a positive time for buyers and sellers to fulfil their property ambitions in much of the country. If nothing else, the current housing market shows that the British public have a lot more than Brexit on their minds. No matter what comes next, Access Financial Services are here to put your mind at ease and help you pursue your goals.