Tales of buyers pulling out of deals and the bottom falling out of the London property market since Brexit have been largely overblown, according to mortgage brokers in the capital.
Jane King, mortgage adviser at London-based Ash-Ridge Private Finance, said she has seen small cuts to prices for first-time buyers and second steppers, but these were related to worries about affordability rather than Brexit.
“Compared with last year, I have the same number of clients actively looking, with only the one drop off: an Italian client who stopped looking as he was unsure of his future in the UK,” she said.
“I have submitted more business in June 2016 than in June 2015 and I’m still very bullish on the grounds that the majority still aspire to own their own home and have plentiful government schemes to choose from.”
Hometrack’s latest report found annual house price inflation at 10.2 per cent in June - the same level as May - but still ahead of 6.9 per cent growth seen last June. Year-on-year house price inflation in London and in other cities in the south of England also started to slow between May and June.
Richard Donnell, insight director at Hometrack, said: “It is still early days, and seasonal factors also need to be considered, but the growth in new listings and slower sales, points to slower price growth in the months ahead.”
Conor Murphy, director at London-based Capricorn Financial Consultancy, admitted seeing an initial panic, with some opportunistic buyers using the uncertainty as an excuse to lower prices.
“Very few deals appeared to fall through as a direct result of Brexit, but empirically, prices in London were re-negotiated by somewhere in the region of three to five per cent,” he stated.
“Transactions appear to be holding up pretty well – albeit we are now in the middle of summer, which is always a slow time – and values have not come down since the initial shock,” continued Mr Murphy.
He said he expected August to be slow, and by September for the market to be back to normal.
Martin Stewart, director at brokers London Money, said some chains fell due to ‘economic uncertainties’, increasingly the preferred way large businesses refer to Brexit.
A few more down valuations are creeping in which will cause difficulties ahead, he said.
“From a business perspective, we have always made sure we try and take the centre ground and not operate at the extremes, where the margins may be higher but the volume more unstable. An example of this is buy-to-let; never a larger part of our turnover, but we have, as yet, not had one buy-to-let purchase in London since 1 April.”
Last week estate agency group Foxtons saw its profits before tax fall 42 per cent in the first half of 2016, from £18.1m to £10.5m, which the group blamed on a slowing London property market, thanks to the EU referendum.
Laith Khalaf, a senior analyst at Hargreaves Lansdown, noted Foxtons now expects weak trading conditions in the London property market for at least the remainder of the year as a result of post-referendum uncertainty.
“Longer term the jury is out on the impact of the referendum result on the housing market, we don’t know whether there will be an economic slowdown and how bad it will be, if indeed it does materialise,” he said.
“If the Brexit negotiations don’t go well, the London property market is probably first in the firing line, because financial jobs could move out of the city.”
Research from LMS monthly remortgaging figures revealed that while more loans were taken out in June than in May, June was also the first month in 2016 where the value of remortgage lending fell year-on-year.
Lea Karasavvas, managing director at London-based Prolific Mortgage Finance, said the remortgage market has been particularly active over the last few weeks, with people hoping to lock in now whilst rates are so low.
“Personally, we feel an interest rate cut will come at the next [MPC] meeting, but I doubt this cut will be passed on, with lenders simply increasing their margins on their tracker products to compensate.”
peter.walker@ft.com
