The huge consequences of the EU referendum, and the impending Brexit negotiations, have drawn into sharp light the consequences for a marketplace which – over the last four to five years at least – had appeared to be on an upward trajectory.
Given the importance of the housing market to UK plc, you can understand why there is a considerable amount of thought being given to how a ‘subdued’ market could be boosted and what measures might be required in order to improve transaction levels and market activity.
If this seems a rather odd state of affairs, then you could well be right, because just months ago the previous David Cameron-led ‘iteration’ of the Conservative Party were actively introducing measures designed to subdue pars of the market, particularly the buy-to-let sector.
Some would say this has been duly achieved, given the slowdown in buy-to-let purchase activity, but I suspect those in the know were not counting on Vote Leave winning the referendum, or the sharper break this would put on the housing market overall.
Designed to provide a boost to first-time buyers, the stamp duty increases, mortgage interest tax relief changes, stricter BTL mortgage underwriting, have simply impacted heavily on landlords but with no corresponding boost to first-time buyer activity.
At least not at the levels Cameron and George Osborne might have been anticipating – now the Government is facing calls from housing market practitioners and stakeholders to reverse these decisions in order to inject life back into the market. Whether this u-turn will be made in the Autumn Statement remains to be seen, but I have my doubts.
If this is the case, then what is the future for the UK housing market? Well, firstly, let’s discount ‘the UK housing market’ because quite clearly it does not exist.
It’s always amused me that we talk about it because when it comes to housing it’s obvious to all that we operate at a regional level. Let’s even drill that down to city/town/village/street, because in every post code the market will be different, and therefore measures designed for the whole of the UK are going to have a different impact wherever you might be.
A recent batch of statistics from the CML showed how many different markets do exist. For instance, when looking at the impact of the Help to Buy scheme we can’t really make generalisations across the entire country.
First-timer buyers are different in every area – across the home nations, for example, Northern Ireland first-timers borrow on average £91k, in Wales it’s £108k, in Scotland £100k, and in London it's up at £258k.
In a sense, and this is the way we’ve been moving in recent years, each part of the country needs to set its own parameters when it comes to such schemes. Criticism of a scheme which allows a first-time buyer being able to borrow up to £450k may be relevant in many regions of the UK, but in London, so long as affordability criteria is met, then the £450k limit makes sense due to the price of houses in the capital.
For agents the talk about the UK housing market – while of interest – is a red herring, because regionally at least the picture may be very different. Indeed we can’t really talk about a ‘London market’ given the disparity between each individual area in the capital itself.
What we have to focus on is our local markets and simply keep one eye on what is happening in other parts of the country which might ultimately affect us. It’s often said that what happens in London and the South East, normally branches out to the rest of the country. I’m not even so sure of this anymore – London, at least Central London, appears to be a different country altogether and its trends are not always mirrored by other regions later on.
What we are likely to see more of therefore is regional intervention, rather than Westminster intervention; indeed, we’re already seeing this with Help to Buy Wales and Scotland acting within different parameters.
That said, there are some issues so big that they are likely to have an all-encompassing impact regardless of where in the country you are. Brexit is unarguably one of those, and as agents we need to keep a close eye on the demand drivers and the supply-side changes which will emanate from this momentous moment.
It’s right to think that the whole country will be shifting in response to this but it’s at a local level that you will be required to act and to determine what’s best for your business and your clients.
*Rob Clifford is a CEO of CENTURY 21 UK, part of the SDL Group