The decision to exit the European Union at the end of June 2016 was unprecedented. It led to an immediate drop in the value of sterling and a sell-off in house building stocks. Following the initial market panic the stock market has rebounded in anticipation of improved macro-economic conditions. However, it is too soon to predict the long-term impact of Brexit on the UK homes market.
The market fundamentals remain strong with robust demand for homes as a result of chronic undersupply. A recent report by the Resolution Foundation showed that home ownership in the UK had dropped to its lowest levels in 30 years, with outer London seeing the second biggest drop of 13.5% to just under 58%. Further, the Bank of England’s decision on 4th August 2016 to reduce interest rates to a record low of 0.25% should reduce the cost of financing and may also provide potential buyers with cheaper mortgages. Nevertheless, we strongly believe that as long as planning restrictions remain obstructive there will continue to be a considerable shortage of housing supply in the South East.
These fundamentals provide attractive opportunities for house builders with the right strategic focus and access to finance. We are confident that our focus on traditional housing for a wide range of buyers in the South East, along with the price of our current housing stock, will keep sale prices stable and we will continue to attract customers. The recent increases in Stamp Duty Tax are mainly applicable to the luxury end of the market and do not adversely affect our operations. The Group remains committed to building new homes in the South East that are in such high demand.
Central London is a market largely divorced from the rest of the UK, in that it operates as a global city and attracts global funds. Pre-credit crunch the Central London market was strongly driven by City bonuses, now overseas equity sources are more important. Price differentials between Central London and the country have never been greater, giving unprecedented opportunities for buyers selling in London to release equity and/or enlarge their accommodation in the countryside. The prime region for such movement of equity out of London is to the South East, especially locations with fast access to central London (eg Sevenoaks).
The studio apartment at Meade Court, Edenbridge. The project consists of nine 2 bedroom apartments including a fabulous third floor penthouse, and additionally a ground floor shop, a studio apartment, and a refurbished cottage. Parking and lift to all floors. All sold.
Mainstream Markets five-year forecast values, 2017-21: these forecasts are post-Brexit vote.
5 years to end 2021
Forecast data from Savills Research. Trafalgar New Homes Plc takes no responsibility to prospective investors for its assessment of future market trends. Investors should make their own assessment of market prospects taking their own independent advice.
See the Latest Market Analysis page for information on recently launched initiatives such as National Planning Policy Framework, New Buy, First Buy and Bank of England’s funding for lending is stimulating market.