Our look back at the 2016 property market
Brexit, the word which has been on everyone’s lips this year, and included in the vast majority of newspaper headlines, has also been responsible for changes in the property market.
The sales market had already started to slow prior to the referendum in June. The outcome brought economic uncertainty to the market, and this led some buyers and sellers to put decisions on hold until a clearer image of what Brexit might mean emerged. This uncertainty from vendors contributed to an increase in the number of rental listings, giving tenants more options. Buyer demand then fell in the months immediately after the Brexit vote, but has since started to rise again.
Outside the capital, house prices have continued to rise, but in London, some areas have seen price falls. House prices in London have seen year on year growth, and in the year to May, price rises in Islington stood at 2.7%.
Brexit has resulted in a drop in the value of the pound. This, combined with record-low interest rates, has led to increased interest from overseas buyers. Though activity has slowed, supply has still not caught up with demand, which has helped to steady house prices.
Tax cuts and stamp duty increases have, in the view of many property insiders, had more of an impact on the market than Brexit. This is especially true of prime central London markets, and true for us.
In fact, the main event which impacted on our market this year was the countdown to the higher stamp duty threshold, which led to a record number of sales enquiries at the start of the year, followed by a last minute rush for completions at the end of March, just before the extra 3% increase came into affect on April 1st.
In the months following April, buy-to-let activity slowed, but it has since started to rise again. Why? Investors are still investing, partly enticed by high yields and partly because the rental market in London remains buoyant due to buyer uncertainty.
Let’s focus on Islington
Following year on year price growth, the rate of growth in the Islington market had slowed prior to the referendum. Buyers were choosing to be cautious, and stamp duty increases were impacting demand.
Immediately after the referendum, the prime central London market experienced a drop in demand. But in recent months, the market appears to be finding its feet, and since August, Islington has enjoyed an increase in buyer demand. After a slower summer, we’ve seen a more productive final quarter.
With properties priced over £2million we have seen falls, while at the lower end of the Islington market, growth has continued but at a slower pace.
If 2016 has taught us anything about the market it’s that it is more resilient and better able to withstand uncertainty than it was back in 2008 when the financial crisis hit. As buyers increasingly look for good value in a city where prices are high, areas like Hackney, Islington and Stoke Newington still offer better value than other prime London areas.