The UK housing market has proved remarkably resilient this year. Sales in the first nine months were 4.2% higher than in the corresponding period last year, while prices rose by a healthy 7.7% in the year to September, sustained by record shortages of properties for sale, low mortgage interest rates and strong demand for home ownership despite increasing affordability issues. Brexit has so far had little impact other than at the higher end of the London and Home Counties markets.
However, whilst Brexit fears have receded in light of better than expected news from the economy, we can expect some further turbulence as we approach the point when Article 50 is triggered, which will formally commence the UK’s exit procedure from the EU. How disruptive this becomes will be heavily influenced by the media whose coverage has considerable ability to shape public opinion.
The other key ingredients for an active sales market are employment security, wages growth and access to low cost mortgages. For the time being, the economy, although slowing, looks like it will avoid the recession predicted by some economists. The employment rate is at its highest in 45 years and wages are rising, albeit only slightly ahead of inflation. Mortgage lending rates remain at record lows, although inflation is likely to continue to rise next year and unless the economy weakens significantly, we could see an increase in Bank Rate in the second half of 2017.