Market Update

Posted on Tuesday, May 28, 2019

Put your right foot in, your right foot out, turn around and shake it all about.

The recent European election results produced an impressive result for the Brexit party but also for the Liberal Democrats and Green Parties whilst the traditional “big two” were hit for six.

So that’s clear then - we’re coming out of the EU – well not if you choose to read the subsequent analysis that tries to balance the voting of those who wish to leave against those who want to remain. Of course, we have voted to leave in 2016 but our elected representatives have failed to ratify the terms negotiated with the EU.

Put your left foot in, your left foot out, turn around and shake it all about.

Theresa May has now resigned and the Tories are having a leadership contest to see who will become leader and Prime Minister. Labour are likely to have to come down off the fence and decide whether they are pro or anti Brexit.

Put your right arm in, your right arm out, turn around and shake it all about.

In the meantime, in a street near you people are trying their best to get on with their lives. Babies are being born, people sadly pass on, jobs are being won and lost and having a roof over one’s head remains one of the key needs for each and everyone.

Put your left arm in, your left arm out, turn around and shake it all about.

There is no doubt that the political hokey-cokey is currently an inconsistent factor in many aspects of our lives and that clear decisions and direction need to emerge. However, the underlying factors that largely determine the property market remain. Yes, the current Government has introduced lots of new legislation and tax changes which are having some impact, particularly on the possible future supply of property in the private rental sector and legislative changes designed to benefit tenants may actually create an environment that encourages increases in rental values for example.

However, interest rates remain at historic lows and those with the confidence to move are doing so. Property ownership has always been a medium to long term decision and commitment.

Over the last fifty years we have had many factors impact on our lives and many which caused short term issues for the property market.

Wars, financial crises and changes of Government have all happened from time to time during this period yet demand, partly due to a rising population has increased and values have reflected that supply and demand position.

Overall, house building, whilst increasing and supported by Government initiatives, has not kept pace with demand. Price inflation has certainly affected affordability but flexible lending, low interest rates and high levels of employment have made it possible for increasing numbers of people to buy their own home.

A few facts:

  • The population has risen from 55.6 million in 1969 to 66.9 million in 2017.
  • Home ownership, whilst having decreased in recent years has risen from 44% of households in 1969 to 63% of households in 2019.
  • The private rental sector has shrunk from 32% of households in 1969 to 21% of households in 2019 but this sector now offers much greater flexibility under Assured Shorthold Tenancies than previous regulated tenancies.
  • Average house prices have risen from £3,757 in 1969 to £226,798 in 2019.

Our overview is that the current market in both sales and lettings is holding up well. As soon as greater clarity emerges on the key issues of the day, we expect to see a noticeable rise in activity and transactional volumes.

As always, the team and ourselves are here to assist and answer any questions you may have.

Yours

 

Darren Murphy and Chris Harper

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