How will the Brexit vote affect the UK property market?
It would seem there is consistent resistance, thus far, to the feared Brexit crash. With official figures showing property transaction values rose more than eight percent in the year to July, the green shoots of hope are starting to appear, and maybe, just maybe, the UK economy might get away with it
However, this optimism may well be a bit too early to be justified. The economic impact of Brexit is still largely undetermined, with the formal process – Article 50 – still to be officially invoked. Yet, despite slowing activity in some sectors, the continued tight supply of houses and a cut in interest rates by the Bank of England, is creating the catalyst needed to boost confidence, and generate continued momentum with both buyers and sellers.
Perhaps for some, particularly first time buyers, the news that house prices increased by 1% in the month of July, and rent prices are at an all time high, is not so good news. However, it is encouraging to hear that they are receiving support by the high street lenders, with a continued supply of 95% LTV mortgages being made available, helping to keep demand in positive territory.
Our expectation is that the UK house market will not crash, although a deceleration to 5% in 2016 is expected and down to around 1% in 2017. Of course, there will be a certain amount of uncertainty among buyers and sellers alike, until the true shape of Brexit becomes clearer. But, with London posting a 12.3% annual increase this year, it suggests that the weakness of sterling is inciting some overseas buyers to enter the market to snap up a bargain, thereby softening the worst of any downturn.
However, at Tiger Financial, we are looking forward to the future. Our funding lines are open and we are ready to do business!
This article was written by Matthew Dailly, Managing Director of specialist bridging loan company Tiger Financial.
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