Wow, has it really been five years since we first voted for Brexit?
These past five years have seen such a lot of change, affecting everyone in all walks of life. This week we are taking some time to reflect on everything that has gone before and look to the future with positivity and hope.
Now, let’s take a look at all the headlines that caught our attention this week. I always try to summarise the links to save you having to click through.
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- House Prices are at Record High for Third Month Running – Rightmove has reported that asking prices for houses have hit a record number for the third consecutive month, with property rates increasing by 0.8 per cent in June 2021 and bringing the average asking price to £336,073. In comparison to the property rate increases of April and May, June has not seen quite as much of a rise, indicating a slight loss in momentum, but has still outperformed its 2020 rate year-on-year. According to Rightmove’s Director of Property Data, this explosion of activity won’t go on indefinitely, though it is predicted to last for the majority of this year. With record-low interest rates and the Stamp Duty holiday, many buyers have been able to grab properties that more closely fit their ideal. However, a lack of choice and increasing competition for properties are both factors that could potentially cool the market. Wales has been an area of particular market activity recently, with buyers drawn to its high value for money and beautiful surroundings. Similar to this is the current buyer interest in the southwest. But of course, as demand increases, so inevitably will house prices rise in the hottest areas.
- Hong Kong buyers rush for properties in London – Despite the number of foreign investors in London dropping critically during the height of the pandemic, new visa regulations which welcome the 2.9 million Hongkongers with British National Overseas status into the UK has brought London’s international market roaring back to life. With the lifting of travel restrictions also on the horizon, London has once again transformed into a buzzing lifestyle hotspot and become an inviting option for international investors, some 300,000 of whom from Hong Kong are expected to make use of the visa offered. Once this transition is well underway, it is expected that demand for rentals in London will also increase dramatically, increasing rental asking prices in the areas of most interest, such as Canary Wharf, Kensington, Covent Garden and Mayfair.
CMA Probe Prompts Aviva and Persimmon to Make Changes – In 2019, the Competition and Markets Authority (CMA) launched an investigation into Aviva and Persimmon for the alleged mis-selling of leasehold homes. The authority suspected housebuilders of selling leasehold homes to tenants and then increasing ground rents, sometimes to double their original cost. After finding evidence of this in February 2020, the CMA threatened Aviva, Persimmon, Barratt Developments and Countryside Properties with legal action if they failed to amend their practices which left many homeowners in financial difficulty and unable to sell their homes. Being faced with these findings and the subsequent threat of legal proceedings, Aviva and Persimmon have responded positively. Aviva has committed to removing terms from its contracts that cause ground rents to double. Persimmon has stated it will now offer leasehold house owners the chance to buy the freehold of their home at a discounted price. Housing secretary Robert Jenrick has shown his support for these changes and the government’s dedication to further “efforts to bring justice to homeowners affected by unfair practices.”
How the UK Property Market has Fared Since Brexit – In 2016, Chancellor George Osborne warned that UK house prices could drop by up to 18% if the country voted in favour of Brexit. It was a loaded statement; one echoed by banks, businesses and associations, as fears over changes ran wild throughout media campaigns on both sides of the fence. Now, on the five-year anniversary of our controversial vote to leave the EU, we wonder how accurate was this warning? Data from the ONS reveals that the average house price in the UK actually climbed from £212,887 in June 2016 to £256,405 in March 2021. Considering the volatility of much of the UK’s social and political infrastructure over the past five years, it could be seen as surprising – nay – shocking, that the housing market has remained solid throughout all the turmoil. The UK has suffered through an excruciatingly drawn-out Brexit, coped with three different Prime Ministers, voted in two general elections and weathered the storm of the Covid-19 pandemic. But perhaps all this instability has revealed the true value of bricks and mortar. In a recent independent survey of established UK real estate investors, 61% considered bricks and mortar to be the safest investment option available. Of course, it can’t hurt that interest rates have remained low, following the Bank of England Base Rate of under 1%, which has played a very strong part in turning affordable homes from a dream into a reality for homebuyers and investors alike.
That is all we have for you this week. If you have any comments or questions on this week’s news summary then please feel free to send us an email at [email protected] – if not, see you next week.