Brexit, pricing and transactions: the latest UK residential market update
Should political clarity be forthcoming there could be more demand coming back to the market, but this is unlikely to materially boost prices.
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Housing market update
The political uncertainty that has rolled on since the Brexit vote in 2016 may soon be resolved, one way or another.
As a result of this uncertainty, and some policy changes such as stamp duty increases, several trends have emerged in different parts of the residential market. These range from rising activity levels in the prime lettings market to a decline in sales in the Greater London market, though the latter belies pockets of the market where activity is increasing, including some parts of the prime market.
Overall activity across the UK has held up in recent years, as political uncertainty has been somewhat offset by ultra-low mortgage rates and tight labour markets.
This suggests that if political clarity emerges, there could be more demand coming back to the market, and potentially a rally in activity.
Even if this happens however, the price moderation seen in the market is unlikely to be emphatically reversed, with lending limits and affordability constraints likely to act as a curb on strong price rises.
Prime central London home prices dipped by 0.1% in September, taking the annual change to -3.9%, the most modest rate of decline in nearly a year.
Pent-up demand continues to build, with the ratio of new prospective buyers registering their interest in a prime central London property relative to the number of new properties listed for sale climbing to it's highest level in more than a decade in August.
Prime country price declines also moderated in Q3, from -2.3% to -1.7% as buyers in some markets stepped up activity amid price adjustments.
Any political clarity is likely to release both demand and supply in both these markets.
Average rents across the country rose 1.3% in the year to September, and by 0.9% across the capital, according to data from the ONS.
In prime central London rents rose by 0.1% in September, taking the annual change to -0.1%, according to Knight Frank’s latest prime London rental index.
Increased demand in the rental market has put upward pressure on rents, which have been pushed from declines of nearly 5% in 2017 back into or near growth in recent months.