The UK property market currently appears to be a casualty of the weak UK economy, confidence in the economy is low which has translated to lower levels of activity in the property market. Due to a lack of confidence first time buyers are waiting on the side-lines waiting for better times ahead. Despite the Bank of England holding interest rates, mortgage lenders have edged up their fixed rate deals up in anticipation that rates may not reduce further in the short term. Inflation is still a concern which ultimately is preventing the Bank of England reducing the base rate to stimulate the overall economy.
Buy to Let landlords are likewise scarce, they are largely not prepared to pay the 5% stamp duty purchase surcharge and are also unnerved by the newly imposed Renters Rights Act which is now law and being implemented shortly. Fewer first-time buyers and fewer investors entering the market has meant chains of sales are hard to generate. The market is beginning to become stagnate without the lower end of the market moving.
The budget scheduled for 27th November seems to be the hot topic at the moment; almost everyone in the property sector is speculating as to what is in store. The media are suggesting the Chancellor may alter stamp duty in some form which could stimulate new activity, if reduced or waived for a period. However, the budget being so late in the year close to Christmas doesn’t really seem like such a great idea, particularly for the housing market as it gives little time for a pickup before the new year.
House prices are still a huge concern, data shows that the majority of sellers are having to reduce before agreeing a sale which suggests that most properties on the market are overpriced, this has been a trend for a while now. Is it estate agents over valuing to win the business or sellers have unrealistic expectations, or maybe both? Either way, prices feel like they are edging downwards, which is supported by data.
As always, we look forward with optimism hoping the budget will be kind and offer incentives to encourage more buyers back to the market and hopefully lower interest rates on the horizon will ease affordability concerns.