'Brexit Fatigue' causes minor uptick in UK house sales - June 2019

01/07/2019
It sure is difficult to avoid the 'B' word in most macro-leaning conversatinos about these isles at present, however, general fatigue - even ennui - about the process might even have caused a minor rally in the UK housing market.

So for another month, we've located some positive housing market news...get ready!


[All statistics which follow are the most recently available figures from the Land Registry and the Bank of England unless otherwise stated.]

The main topics this month therefore are:


England & Wales - house sale prices and volumes rise fractionally

There was a minor rally in average house prices in England and Wales over the last month, both month-on-month and year-on-year – the first 'double-rise' since – last August – however, at £240,535, prices are still below last August's peak of £240,535, the rate of year-on-year rise is still broadly decreasing (only a 1.4% rise, apart from February's 1.3% rise, this is equals April's 1.4% and is the lowest since September 2012.

The volume picture showed the slightest of rises month-on-month (2.6%) from 53,794 to 55,203 but these two figures have the been the lowest volumes since April 2013 (51,047). The year-on-year picture perhaps gives a truer story, with the 10.6% fall almost matching last month's 10.8% fall.


Is this the Brexit Fatigue Bounce? We'll need quite a lot more of it....

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London – minor rally in price, volumes remain subliminal

London's average prices actually rose month-on-month, by 2.4% and to £471,504 from April's £460,357, but still way off July 2017's peak of £488,527. The year-on-year picture remains dour; the 1.2% fall being the 14th month in a row of falls of this nature.

London's volume picture, on the other hand, remained dire. There were just 5,231 sales recorded for February (the latest month's available figures) – you have to go back as far as May 2009 to see a lower figure recorded (5,011). Volumes fell, once again, month-on-month and year-on-year, for the third month in a row.

Cost of living: wages rise but not enough to cancel out inflation

Inflation has risen month-on-month by 0.28% from April and year-on-year by 2.0% (calculated as CPI). The last month's recorded official weekly wage figures indicate that average wages are at their highest level ever – to £532, a 0.8% increase on the month and 3.3% year-on-year.

The better news on wages must be taken in the round however – wages actually fell in March – for the first time in August 2016 – and inflation is clearly steadily climbing.


Mortgage approvals up(!) and remortgages hold steady

As if to give further impetus to the average sales price experienced and month-on-month volume rise in England and Wales, mortgage approvals were up in April, rising 5.9% month-on-month and 3.5% year-on-year to 66,261.

Additionally while remortgages fell marginally month-on-month (0.6%), they rose 4.6% year-on-year and held reasonably steady at 49,401. Clearly these are optimistic figures for the sector although common sense should prevail in terms of seeing what the picture is after at least a couple of months given the number of 'false dawns' the UK housing sector has experienced in recent years.


Boris to cut stamp duty?

Boris Johnson, who at press time looked favourite to become the UK's next prime minister, outlined, during a recent husting, his plans for an emergency budget which would significantly cut stamp duty and reignite the faltering property market. His spoke plan is to scrap the tax on all properties worth less than £500,000.

If this were put into effect, the nex threshold would be almost double the UK's average property price of currently £243,639 and mean that the average property (by price) in London would also be untaxed.

...but it doesn't end there...


Johnson's stamp duty plans would also mean the 12% rate currently levied on homes valued at greater than £1.5 million would be reduced to 7%.

Has Boris Johnson found the magic money tree?

Johnson, alongside stating these plans, added that he intended to freeze all new regulations until his new cabinet has had time to approve them. Given that according to most experts, England and Wales is in dire need of leasehold reform - including the banning of the building of new leasehold houses - and that these much-needed reforms are ongoing, the overall news is somewhat mixed.

It's difficult to square Johnson's pledges of an abundance of tax cuts in many sectors with the fact of a continuing and huge under spend in social care, heath care and policing. Additionally his pronouncements lacked detail and, regarding purely housing, stated nothing positive about addressing the continuing and chronic lack of supply required.

That said, the plethora of applications for stamp duty refund from HMRC indicate at least that the running of some of the taxes could be more smooth...


Fraud on the rise in the conveyancing sector

According to one prominent conveyancer journal:
  • Fraud is on the rise. 60% of law firms reported a security incident in 2018.
  • The SRA reported 217 Scam Alerts in 2018.
  • West Midlands Police Cyber Crime Unit have reported £11m of client money was compromised in 2018.

NAEA reflects Brexit fatigue positivity in latest report

The National Association of Estate Agents (NAEA), in its most recent housing market update, showed even more optimism about the Brexit fatigue bounce that we've described, claiming that the housing market is 'bouncing back'.

The NAEA's figures detail demand reaching an 8-month high in May (a rise 0f 1/6th month-on-month) but still down 13% year-on-year, with supply increased to the highest level since December 2018 - the number of sales agreed per branch increased for the second month running, to 9 (it was 8); the highest level of sales since September last year. 

As is most certainly customary, the NAEA reported that the vast majority of properties are still being sold for less than asking price, with the most recent month (May) being 80%.


'In other news' monthly roundup




Andrew Boast, co-founder of SAM Conveyancing, said:


"Can it be said that Brexit is fatiguing so many in the housing market that some are taking the attitude 'the devil take the hindmost' and simply pressing ahead regardless?"

"The uncertainty isn't going away but even the fractional housing sales volume in rise in England & Wales is to be welcomed with open arms, particularly as high summer is upon us."

"Boris Johnson looks likely to become prime minister at the time of writing and, during hustings, has given his tuppen'worth on his plans to help the housing sector, which we all know has been in dire need for years."

"He's vocally flirting with doing away stamp duty for many, however the law of unforeseen consequences is something always to be borne in mind...and promises made while 'on the stump' can be easily forgotten later."

"Equally, although an across-the-board removal of property taxes would undoubtedly be welcome in our sector at face value, the spectre of exactly where the extra taxes would have to be taken elsewhere to replace lost revenues represents another hard-to-solve conundrum in the scenario."


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