Brexit and Election uncertainty continue to dampen market

The latest market snapshot from the National Association of Estate Agents continues to show how political uncertainty is dampening sentiment and activity.

The data - for October - shows that the number of properties available per member branch fell from 40 in September to 39.

The number of house hunters registered per estate agent branch decreased by 12 per cent in October, from 387 to 341; however, year-on-year housing demand is up, rising from 294 house hunters per branch in October 2018.

The number of sales made to first time buyers decreased in October, to 27 per cent from 30 per cent in September, although annually this represents an increase from the October 2018 figure of 23 per cent.

The number of sales agreed per member branch remained at eight in October.

NAEA chief executive Mark Hayward says: “Brexit is undoubtedly causing uncertainty in the housing market, which in turn affects sentiment and decision-making. On top of both a Brexit deadline and a looming general election, we’re also entering a quieter period seasonally, where we typically see the market slow down as people put their moving plans on hold until the New Year.” 

He continues: “Once the General Election has passed, and there’s clarity on how and when we’ll be leaving the EU, we hope there will be a degree of certainty which may trigger a flurry of activity in the New Year.”

Meanwhile another market monitor - Zoopla’s Hometrack city house price index, looking at 20 key cities across the UK - says city house price growth has picked up to 2.9 per cent.

This is supported by a 1.0 per cent increase in London house prices - the highest rate of growth in the capital for two years.

Zoopla says the shift in London house price momentum is down to a decrease in the number of new properties for sale, which has restricted supply. This is a trend that has been developing for the last 12 months and has been accelerated by the announcement of the General Election on December 12.

Additionally, Zoopla data shows a notable increase in the number of sales agreed per agency branch. “While this increase is off a low base, it indicates that there is renewed demand for housing in London after a sizable drop in sales volumes over the last three years” says the portal.

More realistically priced homes are the final ingredient supporting improved market conditions in London, it says. 

In early 2016, when demand started to weaken, the market grappled with a 20 per cent gap between the price of new listings coming to the market for sale and the price of property being marked as sold on Zoopla. 

This gap has steadily closed over the last four years to a more sustainable level of five per cent. “We believe this will support growth in the number of sales in London over 2020, although we still expect house price growth to remain in low single digits” the portal adds.

Richard Donnell, research and insight director at Zoopla, says: “While the London housing market has been in the doldrums, market conditions in regional cities have been stronger over the last two years with demand supported by employment growth and attractive housing affordability. The rate of growth is slowing, and all cities are registering annual growth of less than five per cent. 

“The announcement of the General Election has brought forward the usual seasonal slowdown, but the last few weeks of the year pre-Christmas tend to be much quieter than after Boxing Day, when consumer interest in housing springs back to life.”