As anyone currently selling a home knows, the market in the UK has started to adjust from the rises we were seeing earlier this year. With everything that’s happening in the world right now, specifically Brexit, this had led some to wonder if the market is facing a considerable downturn. The answer is an emphatic no. Markets have hotter and quieter times and the UK is no exception. The reality is that the fundamentals which underpin the market are as strong as ever, and for that reason we’re positive about the outlook for the market. You can see from our price forecasts below where we think the market is heading.
So what is actually going on right now? Well since the election, some people who would normally have decided to move home have held fire in order to see what opportunities present themselves. Now we’re starting to see the first signs of the market sparking back to life with particular gusto. Although this is not true of everywhere in the country, there are multiple reasons why the market in certain areas is particularly exciting right now.
First and foremost is the impact of the affordability squeeze in central London. Affordability pressures have reached a point where the cost-benefit dynamic of living within the M25 have shifted. Many are finding that the size of property and availability of outside space is unacceptable, even for dual income couples with decent deposits. Those who live outside of Zone 2 are finding that their commutes are already over an hour, sometimes over 90 minutes. By relocating to outside of the M25, many can substantially increase the size and quality of the home they can afford without substantially increasing their commute time.
But the really good news for home sellers outside of central London, is that this is happening at the same time employers are taking a more sympathetic approach to home working, or at least not expecting people to be at their desks in the main office five days a week. For people who work in London but only have to be in the office once or twice a week, other cities such as Oxford, present a fantastic alternative, and prices are in certain areas up to around 50% of the average price for a home in south west London.
There are other reasons that markets outside of London are likely to be relatively ‘safe’ from any market upsets which may befall the national market as a whole. Firstly the market has a very broad base, in the sense that it’s not overly reliant on any one market segment.
More broadly, areas such as Bristol or Bath benefit from a certain configuration of attributes which means if the whole UK housing market imploded, it would be one of the last places to suffer. These such areas have a very high standard of housing stock and the fabric of the built environment is one of the best in the country. The primary and secondary schools are exceptionally good and the higher education facilities speak for themselves. Bristol is frequently listed at the top of shopping destinations. Perhaps even more important though is transport accessibility which connects the town not only to London but other major centres and airports.
So while the market may be flat in the UK, it is only temporary and certainly nothing out of the ordinary. We think the normal pulse of the market has returned already and we’re expecting normal market performance (including seasonal fluctuations) over the next 18 months.