The UK vote to leave the EU has yet to have a real impact on the housing market, according to Grainne Gilmore, Head of UK Residential Property Research at estate agent Knight Frank.
In our latest podcast, she tells Ben Gutteridge, Brewin’s Head of Fund Research, that “so far it’s business as usual” and it will be the autumn before the effect on house prices and activity of the decision to leave the EU becomes clearer.
The Brexit vote has hit confidence and there has been some adjustment down in asking prices on properties since. But Gilmore notes that mortgage rates are being reduced following the Bank of England’s cut in base rates to 0.25% earlier this month, which is “helping to underpin the market and confidence”.
She also references the ongoing “supply-demand imbalance” in housing, with about 160,000 homes being built a year against an annual requirement for about 300,000 additional properties.
Gilmore describes the UK housing market as “multi-speed”, with evidence of an existing slowdown in London ahead of the Brexit vote and modest falls in prime central areas of the capital following recent stamp duty increases. In areas like Knightsbridge and Chelsea, price falls have been up to 6% or 7% over the last year, she says.
However, the weakness of the pound since the Brexit vote gives people buying in overseas currencies an “effective discount”, making UK property a potentially attractive investment for them.
Outside of London she also highlights how the market is stronger in urban areas – where economic activity is concentrated - than rural regions. She points out that brownfield land prices in urban areas are up 9% year-on-year, whereas English greenfield and prime central London land prices have fallen over the past year.
On buy-to-let she says that rents are still rising overall in the UK, but increased letting stock in prime areas of London and parts of the South East is putting pressure on rents in those areas. With the private rental sector (PRS) continuing to grow, there is still demand for lettings, she adds.
The new government has yet to spell out its housing policy. But on the continuing supply shortfall, she says that while the planning regime is key “I don’t think there is a silver bullet. It’s about implementing different strategies at different points in the housing supply chain.”
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