Britain’s property sales and price growth are slowing down but there is a “pivotal month” when we will know if the wider housing market is going to be in serious trouble, according to one of the country’s most prominent estate agents.
Liam Bailey, global head of research at Knight Frank, said in his latest note to clients on the residential housing market that “September will be a pivotal month” to indicate the health in property sales.
For this reason, Knight Frank is not reviewing its market forecast, which was last updated in March.
Bailey points out:
“Recent PMI data reflected the reality that the UK is going to experience a bumpy ride over the next few quarters. That said the outlook seems less tumultuous than was initially expected.
“While a recession for the UK seems a real possibility, what appears less likely is an economic crisis, as was being suggested in the days following the referendum. But just because the worst of the original Brexit predictions for the economy haven’t transpired it doesn’t mean the property market is guaranteed a smooth ride.
“House purchases are a big commitment, and even if the wider economy holds up the property market can still underperform. The extent of this underperformance depends on where you are. In essence the lower the price point, the stronger current market conditions.”
Property sales have significantly slowed over the last few months, both in the lead-up and aftermath of the European Union referendum on June 23.
The Royal Institute of Chartered Surveyors said in a report published on Thursday, that home sales fell in July, with Brexit uncertainty blamed for the sharpest decline since the 2008 financial crisis. July was the fourth consecutive month to see a decline in the number of new buyers seeking homes.
Other issues that are hurting the market too. A significant change to stamp duty tax rates on second homes and more expensive properties have also helped slow property price growth, as well as growth in the number of actual transactions.
During July, for example, properties selling for £1 million or more were at levels last seen when Britain was coming out of the credit crisis and eurozone debt crisis (2011 and 2012). Bailey said that while prices have not crashed, “the prime market slowdown is part of a wider story than just Brexit.”
So, for now, we will have to wait until September to get a true indication of what’s really going to happen to Britain’s housing market.