Whilst some commentators had suggested that the UK housing market would see a slow-down in June due to the Election, now data from last month is available we’ve observed that in reality, the UK housing market remained solid with very little change on the previous month.
Reviewing data from June we can see little movement in key indicators such as:
- Average purchase price remained broadly unchanged with a 0.4% increase month on month
- Minimal change in the average remortgage loan with 0.8% increase month on month
- Average First Time Buyer property purchase price was mostly unchanged on May 17 with 0.8% increase
Mortgage Advice Bureau data is based on written business, e.g. mortgage applications submitted to lenders, therefore this provides a good snapshot of consumer confidence and activity both pre and post-Election. What we’ve observed from the data for June is that the market held up well and mostly showed no sign of a slow-down in terms of consumer appetite for mortgages, either to purchase or to remortgage.
Clearly, consumers are making decisions based on their individual circumstances and generally seem to not to be taking any notice of what goes on in the headlines, or at least taking them with a hearty pinch of salt. The reality is, for most of those moving currently, it’s not a discretionary decision; there are lifestyle drivers which are forcing them to move, for example, a growing family or a need to relocate to get children into a certain school or due to a new job. In these circumstances, regardless of political or economic climate, there is a need to move home, and that is driving activity, rather than a sentiment-based market which we’ve seen in previous years where buying decisions are fuelled by a desire to ‘not miss out’ if house prices are on the increase. It’s a very different buying process now, and those who are currently transacting are, in the main, motivated due to circumstance and not speculation.
Market fundamentals such as the ongoing imbalance of stock versus demand in many areas of the country, together with mortgage rates at or close to historic lows, have meant that what could have been a fallow month for UK property was actually one of the busiest months of the year so far – a fact borne out by the number of residential property transactions in June as noted by HMRC. Granted, whilst the majority of these deals will have been started before the start of the month, doubtless most would have been instigated post the Election being called on 18th April, which further evidences the fact that UK consumers are apathetic to political conjecture because, frankly, it makes little difference in reality to their day to day decision making process.
Of course, the full impact of the Election and its outcome won’t be known until later this year, once we have data on transactions that were started from 9th June onwards. There are some signs of softening home mover activity, however, in terms of the levels of people who’ve applied for a mortgage since the election, either in terms of buying a home or remortgaging an existing one, the immediate evidence points to current market momentum being maintained, which is encouraging in terms of the start to the second half of 2017.