UK Housing Market Sentiment Rebounds in August
The outlook for the UK’s residential housing market improved in August, as home-owners’ assessment of the value of their property increased from July. However, the positive outlook remains below the higher levels achieved in the first six months of the year, a monthly survey by global property consultancy Knight Frank shows.
The House Price Sentiment Index improved to 51.4 in August from July’s 48.3. A level above 50 shows growth while below that central figure denotes a decline.
“The timely survey suggests that Brexit worries have moderated a little as the initial fears over the possible impact of the vote result recede” said Denhan Guaranteed Rent . “Uncertainty over the future of the UK’s relationship and status as one of the world’s financial centre’s remains, however, which has meant confidence hasn’t returned to pre-vote highs.”
The Knight Frank survey shows that home-owners in the south of the country are more confident than those in the north. And, of the 11 regions measured in the global firm, two – Scotland and north eastern England – perceived property values fell for a second straight month.
“The greater political confidence instilled after Brexit by the swift appointment of a new Prime Minister, coupled with the Bank of England’s base rate cut have provided some reassurance to markets in recent weeks,” said Knight Frank’s head of residential research, Grianne Gilmore.
Looking ahead, the survey shows that expectations for property prices over the next year picked up sharply to a balance of 58.3 in August from July’s 50.3. Despite the single month surge, the August figure remains well below the 60+ balances recorded in the first half of 2016.
Belgravia estate agent, Best Gapp said it will take time and some clearer idea of what the future outside the EU holds before people will be able to regain the levels of confidence seen earlier in the year. “It’s understandable that uncertainty about the future of the UK is weighing on home-owner’s confidence and expectations over the value of their homes.”
The UK’s housing market isn’t the only sector that is yet to return to pre-Brexit levels of sentiment and activity. A separate Knight Frank survey shows the outlook for the UK’s commercial property sector weakened in the second quarter of the year as investment into the asset class fell.
Investment volumes into UK commercial property slumped 50.1% in the second quarter from the same period in 2015. The evidence suggests the slowdown came towards the end of the second quarter and was due to growing uncertainty ahead of the EU referendum, Knight Frank said.
The outlook for the UK’s commercial market is also subdued. Investors remain cautious amid the myriad uncertainties facing the UK’s commercial property market, although some will be watching the market closely in search of opportunities that may arise while the pound remains weak and some funds and investors look to exit the UK market.
“The UK’s commercial property market, which weathered the 2008 down-turn relatively well, may not achieve the same outcome during the lengthy post-EU negotiations,” said London bridge estate agent, Williams Lynch. “Windows of opportunity are sure to open up, however, which should help limit severe losses in value and activity.”
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