North East housing market still buoyant after EU vote
Despite the uncertainty fuelled by the EU referendum coupled with the impact of the higher stamp duty now in place on investment property purchases, the North East's housing market remains buoyant, according to the latest RICS Residential Market Survey.
The North East was the only UK region to report a rise in new buyer enquiries last month, with 12% of agents reporting an increase in interest from potential buyers, up from 8% back in May.
Meanwhile, despite over 20% of chartered surveyors in the North East reporting a drop in the number of instructions (homes for sale) coming on to the market last month, 13% of respondents saw an increase in agreed sales. The only other regions to report a rise in new sales during the month of June were Wales and Northern Ireland. However, some North East agents are airing on the side of caution when it comes to predicting levels of sales in the near future, with 20% anticipating a drop in sales across the region over the next three months.
In the long term, prices are still expected to rise, albeit a little less than previously anticipated, with an increase of 14% projected for the next five years. Rent expectations over the same time horizon remain more resilient and are still broadly consistent with an increase of just over 20%.
Chair of the RICS North East Residential Professional Group, Neil Foster of Foster Maddison Property Consultants said: “Over 50% of the country voted for Brexit, so it’s not surprising to see a post referendum bounce in activity and sales completing as scheduled.
“Understandably buyers and vendors are cautious about what affect Brexit will have on the housing market in the long term but it is worth considering that the North East region has experienced very low levels of house price inflation since the crash. Other parts of the country, including London, appear more vulnerable to a reverse in recent price gains.
“In the short term, it’s likely that prices will stabilise, and not fall - as many are predicting - as we still don’t have adequate stock levels to keep up with demand. The volume of property on the market for sale in the North East is exceptionally low and this will also help to support prices.
“Most recent and planned new build in our region is family housing with a relatively limited volume of apartments. This reduces the level of exposure and risk to changing investor sentiment and, with interest rates forecast to head lower, it remains to be seen whether concerns over a slowdown in house sales are justified in this part of the country.”
Simon Rubinsohn, RICS Chief Economist, adds: “Big events such as elections typically do unsettle markets so it is no surprise that the EU referendum has been associated with a downturn in activity. However even without the build up to the vote and subsequent decision in favour of Brexit, it is likely that the housing numbers would have slowed during the second quarter of the year following the rush in many parts of the country from buy to let investors to secure purchases ahead of the tax changes.
“RICS data does suggest that the softer tone to the market will persist over the coming months. But the critical influence, looking further ahead, is how the economy performs in the wake of the uncertainty triggered by the vote to leave.”