Is the property market back to ‘business as usual’ this September?
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There are signs of a rebound following a rollercoaster of a summer says our property columnist, north London estate agent Simon Gerrard.
It’s been a roller-coaster of a summer, from the shock of the referendum decision to Team GB’s record medal haul at the Olympics. As the summer fades and life gets back to “normal”, what next for the property market?
At present there is little national data to guide us as to how the market is reacting after the huge upheaval of Brexit. I am, however, privy to the data from Martyn Gerrard’s 12-branch network throughout north and north west London and, despite the gloomy outlook many predicted following the referendum, August saw the number of property sales agreed and exchangedon par with those of August 2015.
New property instructions are up 31 per cent and represented the largest number of properties coming to the market for that month in six years.
According to Zoopla the number of properties coming to the market across N/NW postcodes remained steady year on year, with a one per cent increase in those coming to market in 2016.
While supply at Martyn Gerrard increased in August, the level of demand also remained high, preventing any danger of the market becoming flooded with unsold properties. In fact, this August saw the second highest number of new applicants registering in six years.
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Our latest analysis of sales prices shows some properties have gone up whilst others have been reduced. I believe many of those that have been reduced were unrealistically priced in the first place. Even so, some are achieving higher than asking price due to renewed interest.
The average sold house price in outer London in June 2016 was £415,854 compared to £359,886 the previous year, according to the Office for National Statistics (ONS), a rise of 15 per cent. However, average prices have risen 79 per cent since June 2006 when the average sold figure was £232,407.
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In the rental sphere buy-to-let investors are slowly returning to the market after the shock of the stamp duty increase for second properties. This suggests that the property market is still considered a stable and profitable place to invest.
Interest rates remain low, with both three and five year fixed rates able to provide some cost certainty to investors. Some of the exceptional deals available include HSBC, who are offering a three year fixed rate at 2.68 per cent (with £749 fee) and five year rate of 2.89 per cent (with £1499 fee) for 90 per cent loan to value.
For those with a 40 per cent deposit HSBC currently offer a three year fixed mortgage at 1.79 per cent (with £749 fee) and five year fixed 1.99 per cent (with £749 fee).
Alongside our own positive data on property market activity, much of the predicted post referendum doom and gloom has failed to materialise. The Market/CIPS Purchasing Managers’ Index, which measures the economic health of the services sector, reported the biggest rebound in UK services in 20 years – the initial shock of the referendum has begun to dissipate.
With retail sales up 5.9 per cent in July compared to the previous month, consumer prices steady and unemployment down, there are reasons to be cheerful and we are seeing this positivity translate into buyer, seller and investor activity.
With the referendum hangover clearing it’s time to switch from reflection to action.
September has always been a good time to buy or sell because the end of the summer holidays encourages homeowners to make the move they’ve been planning. The positive August statistics show that, Brexit or no-Brexit, this isn’t going to change.
Many in and out of the industry had been predicting unprecedented turmoil following June’s decision. However, the signs of a healthy market should offer renewed optimism for buyer, seller and investor alike.
Simon Gerrard is managing director of Martyn Gerrard.