Usual spring buoyancy weighed down by Brexit uncertainty

• The average price of property coming to market rises by just 0.4% (+£1,287) this month, as the traditionally busier spring market gets off to a subdued start:
  • Lowest average monthly rise at this time of year since 2011, though London is the main drag
  • Prices remain more buoyant outside London with nine out of 11 regions seeing new-to-the-market sellers pricing higher
• More buyers hesitating as Brexit goes to the wire:
  • Number of sales agreed by estate agents in February was 7% below same period in 2018, compared with the 4% annual fall recorded in January
• Search activity on Rightmove remains steady, indicating home movers are keeping a watching brief which could lead to an eventual bounce if and when uncertainty abates

The start of the busy spring market is on hold in some parts of the country, with the average price of property coming to market rising by just 0.4% (+£1,287) this month. This is the lowest average monthly rise at this time of year since 2011, and considerably lower than the 0.9% average over the last seven years. With the number of sales agreed by estate agents also falling below this time last year, Brexit uncertainty has at best delayed the usual spring bounce.

Miles Shipside, Rightmove director and housing market analyst comments: “While March marks the start of spring, temperatures have yet to rise in the housing market. Buying activity remains cooler than usual, with hesitation as some buyers await a more settled  political climate. There’s greater resilience the further away you get from the London market, and there’s a sound bedrock of demand for the right property at the right price, reinforced by ongoing housing needs combined with cheap mortgage borrowing.”

London continues to be the main drag as nine out of 11 regions still see new-to-the-market sellers pricing higher than a month ago. Prices in London are down by 1.1% on the previous month, and the other region to record a monthly fall is the North East, down by 1.3%. Their respective pricing histories are very different however, with London prices still 68% higher than ten years ago and buyers looking for prices to settle at a new level of fair value. In contrast, the North East has seen new seller asking prices up by just 8% in the same time-span.

Shipside notes: “London and some of its commuter belt are suffering from a post-boom hangover, with prices now having to be far more sober to attract buyer interest. In contrast, North East prices never had the opportunity to become intoxicated by the capital city’s heady mix of high demand, low interest rates and higher salaries.”

As the clock ticks down towards the Brexit deadline it is natural human behaviour for more buyers to hesitate. The number of sales agreed by estate agents in February was 7% below the same period in 2018, compared with a year-on-year fall of 4% recorded in January. However, search activity on Rightmove remains steady, with the number of visits to the website staying level in the year-to-date.  This indicates that home-movers are keeping a watching brief which could lead to an eventual bounce if and when the uncertainty abates.

Shipside adds: “The closer you get to the wire without the clarity of an agreed way forward, the greater the propensity for buyers to wait and see rather than acting now. This could be a temporary pause, and indeed market slowdowns at election time and around the original referendum result bounced back pretty quickly. Markets and people do not like uncertainty, though while sales agreed numbers are down by 7%, that means they are still running at 93% of last year’s levels. Most potential buyers are getting on with their lives or seeing a price lull as an opportunity to get onto the housing ladder or move to the next rung, with average national asking prices being 0.8% cheaper than a year ago.”