Figures released today show that after a challenging seven-month period it seems that buyers are now returning to the UK property market. Estate agent will be relieved to see this turnaround in recent fortunes with a balance of 8% more estate agents reporting an increase in enquiry levels during September. This compares to a balance of 34% more estate agents who reported a drop in demand in June. So, what can we expect from the UK property market in the short to medium term?
Brexit and taxation
The issue of Brexit is never far from the headlines at the moment and whether we like it or not it will make headlines for at least a couple of years yet. In what some believe to be a self-fulfilling prophecy, the negative press comment in light of the Brexit vote did have an impact upon investor confidence and demand for UK property in the short term. When you also take into account the various subtle increases in taxation directly associated with property investment it has not been the best time for the UK property market of late. However, things are starting to change!
Coming to terms with a new environment
History shows us that time and time again investment markets around the world are able to adapt very quickly to significant changes in their environment. This is exactly what we are seeing with regards to the UK property market which has digested the issue of Brexit and tax increases. While these two issues have been a negative drag on the markets it is also worth considering the monumental change in the sterling exchange rate and the fact the UK is now even more attractive to overseas investors.
It may take some time before the full effects of Brexit come to light but as ever investors are now looking further ahead having seemingly overcome initial concerns regarding recent changes.
Demand up/sluggish supply
When you consider the monumental changes surrounding Brexit and recent tax changes many might have expected UK property prices to have fallen further in the short term. It would appear that much of this short-term support centres round an ongoing reduction in supply to the marketplace. The number of new properties available for purchase has fallen during each of the last seven months. So, even the slightest increase in demand will offer significant support to prices as supply continues to fall.
Experts do not expect any changes with this trend in the short to medium-term although with the UK government promising more new builds surely there should be some movement in due course?
Rents holding up
The rental market in the UK has been relatively strong for some time now and this confusion and concern regarding short-term property price movements has increased demand for rental accommodation. Again, due to recent taxation changes some buy to let investors are holding off on further investment which is stifling the supply of rental properties thereby supporting current rental levels. A number of reports of late have also highlighted a long term lack of rental accommodation which is offering further support to the letting sector.