ASKING prices for houses jumped to a new record high of £308,151 on average in May,
ASKING prices for houses jumped to a new record high of £308,151 on average in May, according to one well-known UK property website. And yet there appears to be a lot of gloom and doom about. So what&rsquos going on? LUCY BOON gets out the crystal ball....
IT&rsquoS the end of the property boom! Or is it? We&rsquore talking about London and the South East, of course — and smack bang in the middle is Henley and its surrounding villages.
There&rsquos been a lot of talk lately about the market generally — from Brexit doomsayers reporting negative impacting to one of the country&rsquos oldest and largest landlords saying it is “only a matter of time” before the market turns after years of double-digit growth.
So what&rsquos going on? Well Standard Property likes to think she has a house-shaped crystal ball. However, you can&rsquot do better than hearing things straight from the horse&rsquos mouth.
Philip Booth of Philip Booth Esq said: “Overall the local housing market has been healthy and has seen steady house price growth across most property types in the Henley area, and I believe this will continue in the medium to long term.
“The first quarter of 2016 has seen an increase in mortgage lending and more transactions taking place, compared with previous years, due to the change in the stamp duty land tax [SDLT] on second homes.
“Investor-buyers in particular were keen to secure their purchases before the end of March to save themselves the extra tax, which created a very busy first three months. This has caused a temporary slowing down of the market in the second quarter as the dust settles. Another influencing factor may be the EU referendum on June 23. Some home buyers may decide not to enter into the market until we know what the result is.”
But whether it&rsquos a “remain” or “leave” vote on June 23, one thing is sure — nothing spooks the property market more than uncertainty.
Bank of England governor Mark Carney has labelled the EU referendum the “biggest domestic threat” to financial stability.
However, Antony Gibson, residential sales director at local agency Romans, says: “I believe that in the long run the residential housing sector will experience little change, with the main reasons for moving outweighing any economic uncertainty, such as downsizing, upsizing, moving to be close to good schools or a new job.”
And yet a recent survey by accountants KPMG found that 66 per cent of real-estate experts polled believed that Britain leaving the EU would have a negative impact on inbound cross-border investment.
The poll of 25 global real-estate investors with assets under management of more than US $400 billion revealed that two-thirds believe a Brexit would result in less inward investment into UK property and property companies.
Other sources also say property developers have paused plans, especially in the capital, as they are concerned foreign investors might avoid the UK property market, depending on the results.
And a lack of foreign investors will likely have a knock-on effect overall. The most recent UK residential market survey from RICS has already highlighted a “continued” lack of confidence in the prime central London housing market.
It reported that 43 per cent more surveyors expect sales to drop over the next three months, and 38 per cent more surveyors expect prices in prime central London to fall over the next three months.
The housebuilding industry, too, seems to be under pressure. At the high end, one property magnate recently admitted that the market for £2million to £10million homes had “collapsed” and that Chinese speculators were “walking away” from new-build flats they had agreed to buy.
Meanwhile, at the lower end of high-end residential property, one Surrey-based estate agent revealed that, he can&rsquot sell “any house in the South East for more than £2million, for love nor money”.
All around, agents are speculating about an “unavoidable” price crash, and openly talk of a “levelling out” of property in the £925,000 to £3.5million market.
Paul Smith, whose company operates a number of national estate agency chains including Haart, said only last week: “We believe the nation has now neared the limit in terms of price rises.
“Our data is already showing a slowdown in both house price growth and transaction levels. In order to maintain healthy sales levels, sellers need to be more realistic with their asking prices. Properties are in danger of being overvalued and these homes will struggle to sell.”
However, he added that the market would remain attractive in the long run.
Stephen Christie-Miller, head of Savills Henley, said: “In recent weeks, we have sold a number of properties priced at £2million and above, illustrating there is real interest in the current market. However, as is always the case, the sales we have done have been for properties which have been priced at a realistic level in order to entice the attention of purchasers.”
Matthew Mannall, partner and office head of the Henley branch of Knight Frank, concurs. “In recent weeks we have agreed a number of sales over £1.5million, which is the market hardest hit following the changes to stamp duty. However, pricing is key.”
So what about property over the £3.5million mark? “Once you get over a certain price bracket, you&rsquore in a playing field where people have finances that allow them more freedom of choice,” said one source.
And yet, there do seem to be a few rumblings in the high-end sector, too.
Nicholas Scarles, financial officer at British property corporation Grosvenor Group, is expecting a property price “correction” in the near future.
“The probability has increased dramatically,” he said, citing the Bank of England&rsquos financial stability report from last December, which said that commercial West End property was “overvalued” by up to 30 per cent.
Grosvenor, which owns 300 acres of land in Mayfair and Belgravia, has already reportedly sold off £240million-worth of luxury homes in London after concern that the rate of growth in the market was unsustainable.
But to end on a positive note, chartered surveyors company e.surv said the mortgage market is doing well, “quietly chugging away in the background”. It claims that mortgage-wise the market has actually had its busiest start to the year since 2007.