UK Housing Market: Conflicting Signals Amid Brexit Debate

A significant shift in the mix of buyers purchasing homes across UK cities is leading to mixed signals about the strength of the housing market. However, there’s no indication of a sudden weakening in market conditions as Brexit remains a central issue.

Shift in Buyer Demographics

The latest Zoopla cities house price index shows a decline in the number of cash buyers in the market, while mortgage applications have increased. In 2013, 29% of purchases were made by cash buyers, but today they make up just 1 in 4 buyers. Meanwhile, demand for new mortgages is at its highest since 2008, suggesting that people are still eager to buy or sell homes.

Signs of Recovery in the London Market

Zoopla reports that the London housing market may be bottoming out. Sellers are becoming more realistic with pricing, and there are signs of modest increases in market activity. Demand and sales volumes indicate that the market is picking up.

Leicester: The Fastest Growing City

Leicester is currently the fastest-growing location in the Zoopla index, with a growth rate of +4.8%. This marks the first time the city’s growth rate has dropped below 5% since 2012. While southern cities have seen price increases of up to 56% since their 2007 peak, many have stagnated or seen prices drift lower recently, offering some good news for buyers.

UK Finance Data: Mortgage Growth Amidst Weak Price Growth

According to UK Finance data, new mortgages for home purchases reached an 11-year high, with 723,000 new loans completed in the 12 months leading up to July 2019. Despite weaker price growth and Brexit uncertainty, the underlying demand for housing from homeowners using mortgages remains strong.

Market Trends Driven by Local Economies and Affordability

Zoopla believes that market trends are being shaped by local economies and the affordability of housing in different cities. While there remains a risk from macroeconomic changes, households aren’t changing their behaviors yet, indicating continued demand in certain areas.