Nationwide, one of the UK’s major property lenders, may have put anyone interested in investment properties on red alert after its latest property market report claimed the October 31st Brexit deadline has ‘sucked the life out of the market’. With that deadline now moved back once again to January 31st, and an election looming, it can be presumed that if Brexit uncertainty has indeed been behind the stalemate, there are at least another 3 months to take advantage.
House prices and mortgage approval rates remained almost stationary over the current month as buyers seemingly held fire in the hope of further clarity around the UK’s political situation. Across the country there was a marginal 0.4% inching up of prices – the eleventh consecutive month that annual inflation of house prices has held below 1%. Most months have been significantly below 1%.
Bank of England figures on mortgage approvals, which numbered 65,919 in September, up just 0.6% on a year earlier, told a similar story. The same kind of pause has been seen across other forms of credit, with the national bank’s consumer credit figures also showing a drop in growth to 6% over the year to September. That represents the weakest growth since July 2014 and a slight drop on August’s 6.1%. An £830 million increase in consumer lending month-on-month was also the lowest incremental rise since March of this year.
Until now, the Brexit saga has seen rock bottom unemployment and rising wages maintain strong household spending stave off any serious economic concerns in the wake of the shock 2016 referendum result. And household consumer confidence in their personal financial situation and prospects continues to read strongly, despite a slight recent uptick in unemployment and sceptical view of the general economic outlook – reportedly worse than even after several major UK banks required government bailouts in 2008.
While Brexit doesn’t seem to be stopping day-to-day and normal household or individual spending, it does appear to be seeping into the property market – perhaps understandably given the greater and longer term financial commitment a property purchase represents. Commenting for The Times, Howard Archer, chief economic adviser for EY Item Club stated:
“The fact that mortgage approvals have fallen from July’s high and are back in the middle of the range that has largely held for some time now suggests that housing market activity remains constrained amid major uncertainties.”
Robert Gardner, Nationwide’s chief economist, added:
“The underlying pace of growth appears to have slowed as a result of weaker global growth and an intensifying of Brexit uncertainty.”
However, for property investors able to make a move, the market slowdown should mean negotiating opportunities with any sellers keen to close a deal. The UK’s property market is often heavily reliant on prospective buyers selling their existing property, which means anyone who wants to seal their own deal in the shorter term could be willing to compromise.
Another boost for property investors is the current strength of the re-mortgage market, which saw 1.3% month-on-month growth in September. Re-mortgage deals are currently close to their most attractive levels ever, prompting significant numbers of home owners and property investors to take advantage with a switch.