UK Housing Market Report for May 2016
BREXIT UNCERTAINTY TRIGGERS THREE YEAR LOW FOR HOUSE-BUYER DEMAND
- Heightened uncertainty around the outcome of the EU referendum caused demand for housing to fall
- The majority of agents predict that demand due to uncertainty may decrease in the short term following a Brexit
- The number of house sales agreed in May dropped
- Supply of available housing and the number of sales made to first time buyers increased marginally last month
Brexit uncertainty triggered demand for property to fall to the lowest level seen in three years, according to the National Association of Estate Agents (NAEA) May Housing Market report1.
Estate agents recorded an average of 304 house hunters registered per member branch in May, as uncertainty in the lead up to the referendum stalled buyers. This was down six per cent from April, and the lowest recorded since November 2013 when 292 buyers were registered per branch. Compared to May 2015 when 383 house hunters were recorded – demand has decreased by 21 per cent year on year.
Houses available and sales agreed per branch
In line with falling demand, last month the supply of houses available to buyers increased marginally – from 35 properties available to buy per branch in April, to 37 in May. The number of sales agreed in May decreased to an average of eight per branch, a drop from nine in April falling to the same level seen during the seasonal slowdown in January.
In May, two in five (41 per cent) agents predicted that house prices will fall and three in ten (30 per cent) expect demand will also decrease as a result of a Brexit result.
First time buyers
Although the number of house hunters registered per branch and sales agreed fell in May, sales to first time buyers (FTBs) increased marginally. Nearly three in ten (27 per cent) of the total sales completed last month were to FTBs, an increase of one percentage point from April.
Mark Hayward, managing director, National Association of Estate Agents (NAEA), comments: “The EU referendum without doubt meant that May was a month of uncertainty for potential house buyers – demand dropped significantly and is currently at the lowest level we have seen in the last three years.
“As a result of the vote for a Brexit, we expect international investors to look a lot harder at the UK as a potential market to buy in and this will have a knock on effect on the house building sector, as investments may be delayed or put off completely. Although in the short term, we believe that house prices will remain stable, we cannot be certain about the next quarter as political uncertainty and market unrest could affect the housing market.
“As this month’s findings show, the supply of available housing is still extremely low compared to this time last year, which is particularly worrying. As we continue to say, there are simply not a sufficient number of homes available in this country to cater for everyone’s needs and a Brexit could impact the skills required to drive property developments in the UK. This means that in the longer term, something will need to give which regrettably could mean a surge in house prices or buyers struggling to find a suitable property in order to move or get that first foot on the ladder. ”