But it’s not all bad news! Figures just released by the Bank of England, show that for the first half of 2016, £128.73bn was lent by UK banks to buy UK property. That’s impressive when you consider only £106.7bn was lent in the first half of 2015. Even more interesting, was that most of the difference was in Q2, as £68.12bn was lent by UK banks in new mortgages to first time buyers – the highest for two years. In Colchester, in the last quarter, £518m was loaned on CO3 properties alone!
Although the Bank of England Q3 figures won’t be released until December 2016 HMRC have already published their own preliminary data which suggests Q3 will be even better, with a massive growth of buy-to-let landlords to the housing market in that time frame. This seems to fly in the face of the popular narrative that uncertainty surrounding Brexit would negatively impact buyer sentiment.
And it’s not just buy-to-let landlords that seem to be flourishing. I’m finding first time buyers are also more confident. Low (and now negative) inflation has had a tangible impact on household finances and first time buyers feel more secure in their jobs. Coupled with a low interest rate environment and you have all the ingredients for a strengthening property market. The numbers back me up too, of the £68.12bn mortgages lent in the second quarter, £14.9bn was lent to first time buyers. That’s the highest proportion of overall lending for over two years at 21.99%.
When I looked at the Land Registry data for Colchester Borough Council area, the average price paid by first time buyers (FTB’S) was £203,821 – a rise of 3.01% compared to last month and over 13.14% compared to the same month last year. Other property buyers are categorised into cash buyers and everyone else buying with a mortgage. The average price paid by cash buyers was £234,680, a rise of 3.01% from last month and up 13.03% compared to twelve months ago. For buyers with mortgages (apart from first time buyers) the average purchase price was £241,822, a rise of 3.04% from last month and 13.17% compared to twelve months ago.
What surprised me most about these figures was how close the property prices, values and percentages were to each other. The combination of low mortgage rates and a stable job market should continue to have a positive impact on the UK and Colchester property market. Although borrowers and mortgage companies are being more cautious, compared to this time last year, low mortgage rates are still tempting people to commit to buying homes.
As we head into winter it feels like we’ve put the initial shock and general Brexit uncertainty behind us and people are just getting on with their lives. With both house prices and mortgage approvals up now is a great time for first time buyers to enter the property market as the pace looks set to continue into 2017.
If any first time buyers would like an informal chat about any aspect of investment in the Colchester property market please give me a ring on 01206 862288 or email email@example.com – I’m always happy to offer a free opinion on any property you’re interested in – send me a Rightmove or Zoopla link and I’ll get back to you, usually within 24 hours.