What’s taken the spring out of the Spring housing market?

Author: Dave Mills

Traditionally there’s a significant bounce in the housing market during the Spring. More mortgages are usually agreed, and more sales are normally completed in the three months to May than in the preceding quarter of the year. It’s just the way it’s been… But this year’s different, which isn’t ideal for people like us who work in the personal finance sector providing products like mortgages. And you’re odds-on to have already guessed why…

What causes the traditional Spring upturn in the housing market?

With winter over and the greatest number of days left until next winter, Spring is arguably the most convenient time to move or buy a first property. Generally-speaking people have more energy to cope with the logistical challenges, and the long summer days in prospect represent ideal opportunities to tackle redecorating, landscaping, refurbishment or even building work. This means buyers will most likely be comfortably settled-in to their new home before the Autumn arrives. As a result, we normally see a pronounced upturn in sales during the Spring, which leads to modest, if not rampant, growth in the property market.

What’s happening in 2019?

Leading property website Rightmove has reported that asking prices have fallen by 0.8% across the UK in the year to March, with prices in the South-East down as much as 1.5% on a year ago. Unsurprisingly, inner-London bore the brunt of the downturn, with prices 5.5 % lower than this time last year. Rightmove spokesman Miles Shipside has said openly that the usual Spring recovery is simply not happening this year.

Why’s house price growth receding?

Well, it’s our old friend (or foe), Brexit… Rightmove’s Miles Shipside told the Guardian newspaper recently: “As the clock ticks down towards the Brexit deadline it is natural human behaviour for more buyers to hesitate. The number of sales agreed by estate agents in February was 7% below the same period in 2018.”

Is it all bad news?

Well, the simple answer is no. First-time buyers will be glad they didn’t buy a year ago considering the latest figures. They can probably expect prices to continue their downward trajectory if the uncertainty over Brexit persists. However, it’s undoubtedly bad news for sellers whose properties don’t command the same asking prices they did this time last year. It’s particularly bad news for property investors, especially if they have invested over the last two years. Although, having said that, most investors will have a long-term strategy that factored-in the short-term risk. Down-sizers are less affected because they are selling and buying in the same market conditions.

The Compass view:

David Mills from Compass said: “For personal finance professionals like me and the public more generally, it’s becoming quite irksome having to view all financial dealings through the prism of Brexit. Nevertheless, we are where we are. Brexit is by far the most important variable affecting our financial health today. And that doesn’t look like changing any time soon. Indeed, until there’s some political and economic certainty over this issue, we are all in for a continuation of this very bumpy ride.”

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