Brexit gloom on house prices, but better times ahead, say reports

A fall in interest from new buyers in the North West led to a downward trend in the region’s house prices last month, according to the latest RICS (Royal Institution of Chartered Surveyors) UK Residential Market Survey.

But prices are predicted to rise again over the coming 12-months, largely due to the ongoing lack of sales stock coming on to the region’s housing market.

The weaker trend in prices in some regions is being driven by the lack of demand from new buyers, which is, in part, a result of heightened political uncertainty, ongoing affordability pressures, a modest upward move in interest rates and a lack of fresh stock coming onto the market.

In October, agents in the North West reported a fall in buyer interest for the fourth consecutive month.

Simon Rubinsohn, RICS chief economist, said: “Uncertainty about the economic outlook on the back of the never-ending Brexit negotiations appears a key drag on sentiment according to respondents to the survey.”

However, real estate adviser Savills says UK house prices are set to rise broadly in line with incomes over the next five years, with the North West expected to show the biggest increase of the regions.

The mainstream house price forecast predicts a 21.6% increase across the North West over the next five years – way ahead of the 14.8% UK average over the same period, says the report.

Brexit will continue to impact sentiment over the short term, it claims, particularly in London and its commuter belt, but local market affordability is expected to determine the pattern of price growth over the longer term, the firm says.

Charlie Kannreuther, head of residential at Savills Chester and Knutsford offices, said: “The North as a whole appears to be beyond the sphere of influence of London, which is being challenged by the short-term uncertainty fuelled by current Brexit negotiations.

Charlie Kannreuther

“The value for money, good schools effect and quality of life cards are falling in the region’s favour, sealing its reputation as a great place to live and work.

“The growth forecast across the North West is a very positive sign and is driven largely by the powerhouse of Manchester, but the thriving hubs of Chester, Knutsford, Wilmslow and surrounding areas tend to do well, predominantly due to their bustling high streets full of independent shops, coffee bars and places to eat.”

He added: “Whilst many other parts of the country have seen significant growth over the last 10 years, particularly across London and the South East, large parts of the North West haven’t benefited to the same extent.

“As a result, we have got some way to catch up which is reflected in our latest mainstream residential property forecast.”

Lucian Cook, Savills head of residential research, said: “With house prices in the North only recently returning to pre-credit crunch levels, there is more capacity for both household finances and mortgage lenders to support more growth over the next five years than in other regions across the UK.

“Brexit angst is a major factor for market sentiment right now, particularly in London, but it’s the legacy of the global financial crisis – mortgage regulation in particular – combined with gradually rising interest rates that will really shape the market over the longer term.

“That legacy will limit house price growth, but it should also protect the market from a correction.”

Meanwhile, Cheshire East Council says it can now demonstrate a housing land supply figure of more than seven years – giving a further boost to the house building sector and home buyers across the region.

It will mean greater opportunity for people wanting to get on the housing ladder, access affordable housing, or move into a new home.

It should also mean a smoother passage for planning applications and a ‘red line’ for unplanned, uncoordinated schemes in the wrong place.

The figure of 7.2 years supply of housing land places the council comfortably above the five-year threshold, which all councils are expected to demonstrate when contesting undesirable planning applications.

Cllr Ainsley Arnold

Cllr Ainsley Arnold, Cheshire East Council cabinet member for housing, planning and regeneration, said: “This assessment means we can properly provide for the market and the affordable homes that local people need, as well as maintaining a sustainable workforce for our thriving economy.

“This gives us a sufficient margin to ensure we have full control over our planning decisions in future.”

As of March 31, 2018, the council had a requirement of 12,630 new dwellings over five years.

It is now able to deliver 18,250 new homes – the equivalent of a 7.2-year housing land supply.