Is there a buyer’s market on the horizon?

The number of transactions in the UK property sector fell again between July and August. This could be seen as evidence that the property market is beginning to stagnate.

HMRC figures

Figures from HM Revenues and Customs (HMRC) showed a fall of 0.5% to 103,490 transactions between July and August 2017. The figures are worked out on a seasonally adjusted basis.

This figure is still 6.6% higher than 2016, but HMRC was careful to point out that it is flat when compared with figures from 2015. The agency said that caution should be used when making transaction comparisons between August 2016 and August 2017 due to the significant changes in behaviour since the EU referendum in June 2016 and the General Election of June 2017.

Property market suffering

Buyers have altered their transaction behaviour due to the uncertainty caused by the political situation, as well as the stamp duty increase in 2016. This makes it difficult to predict the short-term future of the market, but these figures do suggest that the UK’s property market is starting to suffer under the pressures of change.

The National Association of Estate Agents (NAEA) published information recently that seemed to suggest the number of homes on estate agents’ lists is the lowest it’s been for any month of July since 2002.

House price index

Richard Carr house market uk

Stats hint there is a buyer’s market on the horizon.

The much-watched house price index produced by Rightmove also showed recently that the average asking price for a property in the UK fell 1.2% from 9 August to 9 September 2017. This represents the third such fall in just four months.

Changes in the market balance are evidenced by the difference in numbers of new sellers and buyers entering. While it’s been reasonably balanced for a while now, it seems that a buyers’ market could be emerging due to the number of new sellers rapidly rising.

Long period of uncertainty

Other industry experts suggest that some sellers are waiting to find out about the impact of the likely interest rate rise by the Bank of England. There is much speculation in the sector about when a base rate increase will happen, and it’s to be expected that this will have some effect on the property market.

As the UK is set to leave the EU in March 2019, there will undoubtedly be a decent period of uncertainty. However, it’s more than likely that the property sector can withstand the changes occurring and provide stability for consumers and investors.

– Richard Carr

The rise and rise of private rentals

We’re living through a time of huge cultural shifts, including in the property industry. Within a few short years, there has been such a rise in the number of private renters that mortgaged home owners will soon be in the minority.

Experts predict that by 2025, just seven short years away, the number of households owned by mortgage holders will be under six million. At the same time, the number if households living in private rented accommodation will be slightly higher, at six million.

Crossover in near future

This crossover in cultural thinking about owning homes will come in late 2024, according to senior economist from NatWest, Sebastian Burnside.

He says: “We think it’s a fairly comfortable bet that by 2025 we will have more households renting privately than owning their homes with a mortgage, which is a big cultural shift for a country like the UK and something that’s being driven by those underlying demographics.”

Outright home owners increasing

richard carr flats small

Flat rentals are on the increase.

In 2017, there are already more people who own their home outright than people buying a new home with a mortgage in place. The number of outright owners of residential property is set to increase.

By 2024, it’s estimated that around nine million households will own their homes completely. This is an increasingly popular form of home ownership in the UK, and has been climbing steadily since 2013.

This is down to the baby boomer generation, which is increasingly able to pay of their mortgages and own their homes.

Fewer mortgages being taken out

The figures for households in social rental accommodation will decrease from four million today, to just beneath that figure.

Fewer people than ever are taking out mortgages due to the vast differences between their incomes and the price of houses. The gap is just too much for many people to bridge, and with such an uncertain economic outlook due to Brexit and other political causes, this figure is set to decline further.

Private rental sector growing

As the private rented sector continues to grow, it’s predicted that lenders should rethink their strategies when it comes to repossession.

Traditionally, lenders are more lenient with home owners who fall behind on their mortgage payments. By contrast buy-to-let landlords are much more strictly treated. Defaulting landlords can expect to have properties repossessed in a few short months.

This obviously poses a problem to families who are living in the properties for the long term. As this number is likely to rise continuously over the next few years, it’s another adjustment that the industry must make to keep up with changing attitudes towards home ownership.

– Richard Carr

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Brexit concerns


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