It's probably never been harder to explain what's happening to the national property market than it is right now. Purely by virtue of the huge number of factors at play it can be very hard to see the woods from the trees. However, if we were to boil it down to one sound bite, we'd probably say something like; "the market is pausing for breath, but the outlook is good".
What does this mean for buyers and sellers in the market, or about to be in the market? Well firstly it’s worth mentioning that the market is antagonistic between the two. To say that the market favours either buyers or sellers is to over-simplify a fairly complex interplay of factors. The reality is, there is always more demand for property than supply can meet which is why property will almost invariably rise in the long term everywhere.
The main factor which determines how fast the heart of the market is beating is interest rates. This is a crucial variable, and one which connects the UK property market with the bewilderingly changeable world we seem to live in at the moment. We are at a crossroads, and it would be foolish for us to ignore that the road ahead may be bumpy. Here's one possible scenario in which Brexit makes the UK property market a bit choppy in the next 12 months. The low value of the pound makes the goods we buy from abroad more expensive, and this causes prices to rise. Inflation, which is already at a four year high, starts to gain pace. The Bank of England is then forced to raise interest rates to prevent the economy overheating. Monthly mortgage payments then start to rise, putting people off buying homes, and the property market loses all its buoyancy.
Now, we do not think this is actually going to happen like that, despite what you might read in the papers. It's worth taking a step back from the tabloid hysteria and think about where we are in the economic cycle. We are at the end of a cycle which started with the recovery which followed the credit crunch in 2008/09. The typical sign of the start of a new cycle, where prices in prime central London dip, before starting to rise again has already come and gone. Lower year-on-year growth is visible across all regions of the UK. However, this is simply a natural feature of the economic cycle which affects the UK market.
So with this in mind, we're actually very positive about the prospects for the UK market. What we've seen in the last five years is a rebalancing of the country away from London towards more affordable and liveable parts of the country. People are looking for a work-life balance, good schools and cultural pockets outside of the London Underground map.
Bristol, for example, is on the top of a lot of people's lists for all those reasons. Not least because of a growing acceptability of home working which has stemmed from better broadband and cloud-based working. The data for Bristol reflects this. Since 2011, average year-on-year growth in Bristol has been 5.3 per cent, and the growth in other areas, such as Bath (5.4 per cent) and Oxford (6 per cent), has also been higher than the UK average of 3 per cent. This reflects the 'robustness' of local markets and how important it is to consult local property experts when considering your next move.
Crystal-ball gazing has never been a good idea in property, least of all these days. However we think in the period of uncertainty which we’re currently experiencing, there will be some winners and some losers in the market, and most people won’t be affected one way or another. So we’re confident that if there is bad weather on the horizon, the UK is well placed to weather the storm. The things that matter to people when they were thinking about buying or selling two years ago matter just as much now as they did then. Things might not be as strong and stable as we’d like, but nor will the sky fall in. And if you’re a bit exhausted by political puns, things can only get better.