Market Commentary – November 2016

Nov 25, 2016

Good news for the UK, the Council of Mortgage Lenders (CML) has released their market analysis from the post Brexit-era, and the nation is faring better than predicted following the referendum to leave the European Union. Although there has not been significant change, the little change has been positive.

The labour market has impressively hit its lowest point in 11 years at +4.8% between July and September, with one of the highest proportions of people in employment of all time. The economy has kept its head above water and has grown by +0.5% since June in comparison to the three months leading up to the referendum. Inflation has stayed stagnant for the most part, it did fall -0.9% in October but is expected to jump to +2.7% by the end of 2017 and remain at a steady +2.5% until the end of 2019.

Market Commentary - November 2016

As for the housing and mortgage markets, Emoov likes what it sees. Again, there are no drastic changes, but they are favourable for both homeowners and potential buyers considering the rocky climate in the nation over the past few months. The demand is strong, but supply is having difficulty keeping up – currently the chief problem in the industry. The number of transactions is therefore diminished, and the price goes up on account of a bidding war scenario. The real problem lies not with existing homes, but instead with not enough new homes being built to move with the pace of potential buyers.

Mortgage and house purchase approvals had also fallen in August, according to the Bank of England, who made amendments to the process due to the market being stronger than expected. An approval could take a few months, and for this reason, transactions in the housing market are coming through into October and November. The gross lending for 2016 has jumped by +10-12% (£240-245 billion), which is supports a stable mortgage market.

First-time buyers have the best opportunities in the property market because of government programs such as Help to Buy. This demographic historically made up one third of the buying market, but now it is almost half. The major problem in the housing market which continues to persists are those affected by stamp duty – current homeowners looking to move and those involved in buy-to-let.