One of the first major pieces of research to come from an estate agency following the EU referendum suggests the short-term effects of the Brexit vote will include lower sales volumes and house price growth beginning to ‘slacken’.
Savills says caution is likely to be the main characteristic of the mainstream housing market particularly amongst discretionary buyers, although low interest rates and a comparative shortage of housing supply in terms of new homes will serve as fundamentals continuing to underpin the market.
“Over the medium term we expect to see sentiment improve but also fluctuate as negotiations to leave the EU proceed” explains Savills director of research, Lucian Cook, widely regarded as one of the most authoritative commentators on the market.
He says this caution will produce lower sales volumes in the short term, with the prospect of possible tighter lending controls from mortgage firms reducing the number of deals still further. “However, at this stage, we do not expect sales volumes to decline to post credit crunch lows” he adds.
Although mortgage lending has so far been unaffected by the June 23 vote for Brexit, the possibility remains of further Bank of England restrictions on lending criteria. “If stricter borrowing rules come into play, first-time buyers and second steppers will be the most affected” notes Cook.
Low interest rates - possibly lower still if speculation over today’s meeting of the Bank of England financial policy committee proves correct - may present opportunities for those on low loan-to-value mortgages. But Cook warns that house price growth is likely to weaken because of reducing demand.
“Looking ahead, the possibility of a slower economy could have an impact on price growth. We do not rule out the possibility of price falls in weaker markets” he cautions.
In a separate report the online agency HouseSimple says more than two-thirds of towns and cities saw new property listings fall in June, with supply down 13 per cent in London alone.
It says Lichfield and Winchester registered the biggest drop in supply in June, with new property listings down 37 per cent and 36.5 per cent respectively.
And another market snapshot from LSL Property Services suggests house prices rose 0.6 per cent in June with the average house sale price now reaching £293,444 - but with the effects of Brexit yet to be felt.