EU Referendum Special - Ian Preston's Market Update for June
So we have got to two big topics to talk about today. The first one is the EU referendum and any early indications about how that may be affecting the housing market and what the anticipated outcome might be. And secondly the housing crisis - so the discripency between the number of new homes being built and the demand for property out there at the moment.
Impact of EU Referendum on Property
So first of all on the EU referendum - I am going to steer fully clear of politics and expressing any political decision, what I would say is that we expected a bigger impact than we’ve seen. So our sales rate, the proportion of houses which are selling when they come to the market is currently running at 85%, that is really high compared to a normal estate agency market - which is what really much of what we’ve seen over the past 2-3 years. Therefore the indications are that demand is unabated and that is being driven by low mortgage rates, money is cheap and therefore demand is still very high for property both from tenants and from buyers.
Now as we approach the EU referendum over the next 2-3 weeks, I think its going to be quite interesting to see what happens. Our expectations are that if there is vote to leave, that the 2nd six months will probably be harder than the first six months in terms on demand for property. We think there will be more choice available for buyers and if we vote to remain iIsuspect it will probably remain very much a sellers market and actually the 2nd six months will kick on which is very nice for home owners and landlords. So we will wait and see how that shapes up over the next month and I will be reporting back on that.
Shortage of New Houses in the UK
In terms of the housing crisis over the last 4-7 years now, the number of new homes being built range from 120K up to 160K and this year from having a look at the Government’s numbers they are talking about 170k new homes being started in this financial year. Now what this actually means there is a shortage of new homes being started compared to the number of new households being created.
So the government numbers tell us 200k new households are being created each and every year and obviously there is a shortfall of between 30-60K houses being constructed each and every year. So that is putting pressure in two areas, first in terms of private rented stock. So with the changes to stamp duty we have seen a lot of landlords dispose of properties and exit the market. We’ve also seen a number of new landlords enter the market before the stamp duty threshold as well. So there has been quite a turnover of stock in the early proportion of the year. And its also fuelling the demand for property so good quality property and great quality areas is still as incredibly high demand for it and we’ve still got many many competing offers.
Land & New Homes Service
So to try and do our part to tackle this in Yorkshire we have really been working very hard to invest in a much expanded Land and New Homes team which is being headed up by my business partner James Baker. James is offering a consultancy service along with his team about what you can do with land.
So if you have got land, if you have got an old office building, a pub - anything like that which you think could be used for a residential development I encourage you to get in touch with James at james.baker [at] prestonbaker.co.uk and actually email him with this because the opportunities are vast, demand is really serious for property at the moment and we have lost of investors looking who are either looking to buy property which has planning permission on it already or alternatively or land that could potentially could get planning permission on.
So we see this as a really really important opportunity for land owners and also developers looking g to get into the market and obviously that will feed out to buyers and tenants as well.
So we will be updating you on the EU referendum at the next months market update and really looking forward to catching up with you then. If you have any questions about the update today please email me at ian.preston [at] prestonbaker.co.uk
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