House Price Optimism Steadies after Post-Brexit Slump

House Price Optimism Steadies after Post-Brexit Slump

Welcome to Surelock Network Auctions’ May 2017 Newsletter. It’s been a very busy period with plenty of news and developments, including the PM’s General Election announcement and some interesting changes in the housing market. While it’s too early to tell what the eventual impact of the election will be, we are seeing further signs that northern regions are gaining in popularity, largely at the expense of London.

It’s no secret that house price growth has slowed in the past 12 months or so and a recent Halifax survey quizzing home-owners about their views suggests the new lower level of house price inflation has been accepted. According to Halifax, one-in-six respondents said they anticipate house price rises, a similar result as the previous survey in the latter months of 2016 but much lower than the 72% in May 2015.

While that suggests home-owners are aware of a ‘new normal’ of lower house price growth, there was also evidence that the difference between attitudes in North and South England, with northern home-owners more confident than their southern counterparts.

Halifax also asked whether the next 12 months was a good time to buy a home; northern respondents were noticeably more confident than those from the south. Specifically, sentiment over buying a house in the next 12 months was highest in Wales and lowest in London and south England, the Halifax survey showed. And, when it came to the next 12 months being a good time to sell, London stood out as the least positive.

News of home-owners accepting a slower pace of house price growth during a difficult period for the UK economy is good news. And, although the weaker sentiment in the south of England isn’t welcome for those experiencing it, it is good news for those hoping to make a purchase there.

Commercial Market Shows Some Signs of Improvement

While the residential housing market is improving, particularly in the north, a similar picture has been detected for the UK’s commercial property market, too. According to the latest commercial survey from the Royal Institution of chartered Surveyors (RICS), investor interest in commercial property has improved across the whole of the UK. However, from a tenant perspective, demand in London is lagging behind the rest of the country.

The industrial sector of commercial property investment has been the strongest in recent months, with investors from the UK and overseas showing a lot of interest. Demand among tenants, meanwhile, has also been strong in most regions excluding London.

Looking ahead though, the RICS chief economist, Simon Rubinsohn said the positive momentum noted in the survey was welcome news, however, “it would not be a surprise if activity slows somewhat ahead of the forthcoming general election.”

At Surelock, we think that’s something that could happen across most industries, including the residential housing market, too.

Why are Some Foreign Investors Bypassing London?

As far as investors go, it would appear that property prices in parts of London haven’t fallen enough to be worthy of the risks associated with them, ahead of what’s increasingly looking like tricky Brexit negotiations. At the same time, investors are looking north and are pleasantly surprised at what they’ve found – average property prices far below those of the English capital.

Of course, for some investors looking at specific areas in London, the figures are beginning to add up – just take a look at what some Chinese residential developers have been buying up. On the whole, though, northern regions are proving a much more appealing investment opportunity, that a growing number of investors are snapping up.

With more foreign interest in property north of London, it might be worth your while to see what’s available in the next property auction and see if you can get involved. After all, where there’s investment there’s sure to be renovation and improvements being made, generating an increase in demand and a profit to be made.

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