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Monday, July 18, 2016

0.9% fall in asking prices post-Brexit

The first bit of ppst-Brexit house price data is through with Rightmove’s asking price data for July 2016 (two weeks pre-Brexit vote and 2 week post ) has the average asking price down 0.9% (-£2,647)  from June.(although a holiday slowdown does typically result in  falls of  0.4% in July).

asking prices july 2016

Rightmove's Miles Shipside comments:

“As far as the price of property coming to market is concerned, the fall of 0.9% is within the range that we have seen at this time of year since 2010. With the onset of the summer holiday season new sellers typically price more conservatively and the average drop in the month of July is 0.4% over the last six years. Perhaps unsurprisingly this July’s fall is marginally larger, as political turbulence has a track record of unsettling sentiment. Indeed last year saw a seasonally unusual 0.1% fall in the run up to the May election, and a June and July price surge as a result of the post-election boost. Average new seller asking prices were up by 3.1% over that two-month period.

Housing markets do not like uncertainty, with positive sentiment typically driven by confidence and momentum, supported by low borrowing costs. There seems to be little prospect of an increase in historically low mortgage rates in the short to medium term, with even greater certainty readily available with increasingly competitive five-year or even ten-year fixed rates. Agents in areas where stock shortages were driving momentum before the referendum say activity has recovered quickly, with buyers’ fear of losing a scarce property a key factor. They say that very few deals have fallen through as a direct result of post-Brexit jitters. Those areas of the country whose housing markets were struggling or readjusting earlier in the year, such as parts of London, will continue on what is often a fairly lengthy path of price reductions to encourage buyers to return in numbers.

While confidence has been unsettled, the governmental instability in the few days after the referendum now seems to be being addressed far more quickly than was originally imagined. This is not a new credit crunch and the effect on banks and mortgage lending should be limited. As long as lenders keep mortgage deals attractive and available, the underlying demand for home-ownership should overcome most uncertainties.

If you’re putting your property on the market and are keen to sell, then pitching your asking price too high would be counter-productive in the current environment. Buyer affordability is already stretched and they will be looking for extra reassurance that they’re getting the best priced home to suit their needs. Pricing competitively will tempt buyers, some of whom are sitting on their hands. Sellers may be extra-willing to negotiate in some less active parts of the country, so there could be opportunities for a mutually beneficial deal for buyers combined with a speedier sale for sellers.”

The summary so far based on two weeks of post-Brexit-vote statistics is that the housing market remains steady, underpinned by the same fundamentals that have led to its recovery since the last downturn.”

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