After the initial shock of the Brexit result in June, there is a growing consensus amongst surveyors and estate agents that the housing market is recovering.
The Royal Institute of Chartered Accountants (RICS) reported that 12% more of its members had noted house prices rising rather than falling in August, up from 5% in July.
In addition, while new buyer inquiries fell again in August, The Times noted that the “pace of decline in new buyer inquiries had also slowed, with 7% more chartered surveyors reporting a fall in demand in August, compared with 25% more reporting a decline in July”.
Figures published by the Halifax backed up this positive outlook, which reported that house price growth had continued post-referendum, although there had been a slowdown in the rate of growth.
The Land Registry House Price Index for July showed a similar rise in prices across the country. Most commentators have put this down to a continued lack of supply on the housing market and low borrowing costs, following the summer base rate cut by the Bank of England to a historic low of 0.25%. Simon Rubinsohn, chief economist at RICS, told the The Times that, “It is likely the swift response from the Bank of England, both in terms of the lowering of the capital buffer and the cut in interest rates, has played a role in helping to support confidence”.
House prices in London went up by 12.3% in July, and the average price of a property in the UK is now £216,750.
The longer-term outlook remains unclear however. Speaking to the Telegraph, Thomas Fisher, an economist at PwC, noted that many of the transactions on which house price data is based will have been “in motion since before the referendum”, and “more data will be needed to make a proper assessment of how the referendum result is affecting the housing market”.
The Telegraph went on to note that, “the autumn selling season, which is traditionally strong, will offer a better picture as to the state of the housing market post-Brexit”.
Fisher also commented that, “our own expectation is that the UK housing market will cool not crash. In our main scenario, average UK house price growth is projected to decelerate to around 5% in 2016 and around 1% in 2017.”
According to RICS, “much will depend on how buyer sentiment ebbs and flows as negotiations to leave the EU progress.”
While uncertainty remains over the longer-term outlook for the housing market, title insurance remains as relevant as ever. The product works as a transaction enabler whether that be in a buoyant market to expedite sales or in a cooling market to avoid aborted sales.