With our half year productivity up on last year and a record amount of property sale exchanges anticipated in July, are we really at odds with some of the negative press coverage around right now? Thankfully we are finished with General Elections and Referendums, for a while at least. The last three years have seen the residential house market disrupted in the lead up to these events, typically bringing a slow down in activity pre-event, followed by a rapid uptake in transactions post. The problem with most media coverage is that they work on house sales completions, which inevitably reflect a market three or four months prior and thus bear little relevance to the market occurring now today.
With the 2017 General Election firmly behind us, we can now look at the winners, who in property terms were the buyers who took the plunge and negotiated a deal pre-election. The wise buyers took advantage of a typical modest slow down in activity in the lead up to the General Election. Now, the market pace is set to rise during the remainder of 2017 and this is shown in our June and July 2017 productivity levels.
A Productive 2017
We have are already experiencing some record new ‘Sales Arranged’ figures this year, so we are optimistic about trading levels for 2017. Our house sales income at the half year point was up on last year and July is expected to finish with a record house sales income level. This doesn’t mean house prices are increasing, but instead it means the volumes of sales is on the up and buyers are being decisive, partly influenced no doubt by a shortage of supply which is a UK wide problem as the RICS survey out today reports by stating that new instructions had fallen for the 16th month in a row.
We look forward to a further review of the market late Summer / Autumn, when it will be time to check in on our market predictions. In the mean time our summer lifestyle and property magazine In The Country and Town is being read in thousands by potential buyers, investors and influencers alike.
The Rental Market
The Government is likely to ban tenant fees and this will result in agents charging Landlords higher fees, in order to recoup the costs of creating a lease and security checking a suitable tenant. The net result for tenants will be increased rents. ARLA, the industry professional body, recently stated that it does not support the fees ban, and that fees represent a legitimate cost to business that needs to be covered.
In many ways tenant fees are akin to house buyer fees, where referencing checks equate to mortgage application fees, contract negotiation charges are akin to conveyancing costs and inventory costs are similar to a survey cost.
The reality is that in order for a Landlord to be protected, many pre tenancy actions need to be undertaken and the cost of delivering these services has to be met in order to put in place the necessary safeguards.
In our area of operation, there is no evidence of Investment Landlords selling up as their profits start to dwindle due to the phasing out of tax relief on mortgage interest in April. Landlords will however seek to produce profit, and tax burdens together with the migration of tenant fees will force them to seek ever increasing levels of rent.
We can look forward to some exciting new beginnings ahead and Brexit with all its uncertainty should be engaged with, and not seen as a doom-laden event. Remember there has not been the immediate 18% reduction in house prices post Referendum as predicted by George Osborne, nor many of the other horrific economic events. Many believe that sooner or later we will suffer, and that calamity will befall us in due course, but now is the time to focus on prospering and adopting a positive innovative attitude to our future; especially by business and industry in general.
For the remainder of 2017 I believe the residential housing market will be in good shape. This doesn’t necessarily mean a growth in property values, but it does mean that properties will sell faster and the number of transactions will be increased.
This in some way is also reflected in the experiences of the housing market in the United States, where there are some very similar scenarios. Like the UK, prices are continuing to rise despite political and economic uncertainty and some of the main reasons are also the same, namely a lack of supply. Prices for US housing is higher than April 2016 and this is having an effect on first time buyers and second movers, both groups that are essential for a healthy housing market. Also, rising rents mean that tenants hoping to buy find it harder to save for a deposit. A major difference between the two housing markets is that interest rates are rising in the US.
From a UK perspective there are some similar influences. It has been said that an interest rate rise would dampen the market, but this has not happened in the US. It was said that Brexit would have an effect, but it hasn’t. In both the US and UK more new homes are needed but this is not going to happen overnight and could take a decade to sort out.
I am confident about a positive output in 2017 and this confidence spills over into decision making about investment recruitment etc., so our corporate eyes are set firmly on making 2017 work well.
Chairman and Managing Director