Demand for housing has been surging ahead in recent years, as buyers look to take the plunge amid a positive market with strong house price growth and record low mortgage rates. But is the tide starting to turn?
New figures from the National Association of Estate Agents (NAEA) show that home-buyer demand has hit a three-year low as a direct result of Brexit uncertainty, and now that the results are in, it's likely that buyers will continue to delay their plans until stability returns.
There was an average of 304 house hunters registered per member estate agent branch in May, a drop of 6% from April and the lowest recorded since November 2013, when 292 buyers were registered per branch. It also marks a significant annual drop of 21% – 383 house hunters were recorded in May 2015 – and analysis points directly to buyers being stalled by uncertainty in the lead up to the referendum.
In line with the drop in demand, the supply of available housing saw a slight uptick – rising from 35 properties per branch in April to 37 in May – while sales decreased, falling to an average of eight sales per branch, down from nine in April.
However, there's a strong chance that this re-balancing of supply and demand could lead to a reduction in house prices, with the Brexit vote arguably fuelling this even further. For example, 41% of agents predict that house prices will fall, and 30% expect demand to similarly decrease as a direct result of the vote, with uncertainty being the overriding feeling among home-buyers.
Mark Hayward, managing director of NAEA, agrees: "The EU referendum without doubt meant that May was a month of uncertainty for potential home-buyers – demand dropped significantly, and is currently at the lowest level we have seen in the last three years. 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."
He pointed out that Brexit could also affect the level of interest from international investors, which could "have a knock on effect on the house building sector as investments may be delayed or put off completely", an issue that could heighten in the months ahead.
"As this month's findings show, the supply of available housing is still extremely low compared with this time last year, which is particularly worrying," said Mark. "There is 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."
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