Well, hasn’t 2016 been eventful.  The ups and downs of Brexit, the Queen’s 90^th, Andy Murray winning Wimbledon, Trump, Bake Off to Channel 4 and something close to the hearts of every buy to let Landlord and homeowner in Locks Heath … the Locks Heath property market.

So, let’s look at the headlines for the Locks Heath property market…

In the last month, Locks Heath property values dropped by 0.61%, leaving them, year on year 10.1% higher, whilst interestingly, Locks Heath asking prices are down 2.0% month on month.  All three statistics go to show the Locks Heath property market has recovered well after the summer lull, which was worsened by the uncertainty surrounding the EU vote back in June.  Irrespective of all the issues, the average value of a Locks Heath home now stands at £344,700.

Generally, Locks Heath asking prices continue to hold up well, as asking prices are 4.7% higher year on year.  At this time of year, asking prices tend to drop on the run up to Christmas, and locally they dropped by 2.0% in November 2016, although this still compares well with last year’s drop in Locks Heath asking prices, as we saw asking prices drop by 1.1% in November 2015.

It is also interesting to take note from a recent survey by the Royal Institution of Chartered Surveyors, stating new buyer enquiries and new instructions are falling at the same rate, suggesting that there will not be a downward pressure on property values.

Looking at the figures for the UK (as we can’t just look at Locks Heath in isolation), property values are generally rising slower than a few years ago, but on a positive note, there is still growth across the UK.  You see, slowing property value growth isn’t solely Brexit related, but after a number years of double digit rises in property values, affordability has weakened and cooling price growth is widely seen to be a natural correction of the market.

On the other hand, interest rates being at a record low of 0.25% are helping the property market.  The cut in interest rates in the late summer was the medicine for the post-Brexit worry and will, as a consequence, ensure that the UK economy continues to be underpinned by buoyant property prices.

So, what will happen in 2017 in the Locks Heath property market?

Some say until we know what type of exit the UK will make from the EU it is hard to evaluate the outcome.  Although, I believe, the whole Brexit issue is a sideshow to the main issue in the UK (and Locks Heath) housing market as a whole.  As I have mentioned time and time again over the last few months, the biggest issue is demand outstripping supply when it comes to the number of households required to house us all.  Locks Heath has an ever-growing population: with immigration (we still have at least two years of free movement from EU members into the UK), people living longer and the fact we need thousands of additional households as the country has nearly 115,000 divorces a year (where one household becomes two households).  These are interesting times ahead!

Apart from some minor exemptions, Stamp Duty is paid by anyone buying a property over £125,000 in the UK.  It presently raises £10.68bn a year for the HM Treasury (interesting when compared with £27.6bn in fuel duty, £10.69bn in alcohol duty and £9.48bn in tobacco duty).

In the latest set of data from HMRC, in the MP constituency that covers Locks Heath, property buyers paid £10m stamp duty in one year alone – a lot of money in anyone’s eyes (although not as much as the £263m in income tax that all of us in the same area paid last year).

However, as you may know, George Osborne introduced an additional tax for landlords and from 1^st April 2016 they had to pay an additional 3% stamp duty surcharge on top of the normal stamp duty rate when purchasing a buy to let property.  There were tales of woe and Armageddon with a report by Deutsche Bank suggesting that the new surcharge could see house prices fall by as much as 20%.

HMRC data released in the Summer for Quarter 2 (Q2) of 2016 did seem to back up those fears as they published some worrying figures; only one in seven properties purchased was a second home or buy-to-let (in real numbers, only 30,300 of the 207,900 properties in Q2 were bought by Landlords).

In previous articles, I spoke about the slump of property transactions after the 1^st of April (as Landlords rushed through their property purchases in March to beat the April deadline).  In Q2 of 2016, £1.976bn was raised in Stamp Duty from Residential Property.  Of that £1.976bn, £652m was paid by buy to let Landlords (£424m in normal stamp duty and £228m in the additional 3% surcharge).

However, looking at Q3, the numbers have improved significantly.  Of the 235,000 property sales, nearly one in four of them (56,100 to be precise) were bought by buy to let Landlords and of the £2.208bn in stamp duty, £864m was paid in ‘normal’ stamp duty by BTL Landlords and an impressive £442m paid by those same Landlords in the additional stamp duty surcharge.

The statistics suggest buy to let investors have thankfully not been deterred by the stamp duty surcharge introduced in April this year.  The figures also show that 65.4% of “buy to let” purchases cost less than £250,000, 23.7% of properties were in the £250k to £500k range and 10.9% (or 6,100 additional properties) of buy to let properties bought cost over £500k – interestingly nearly one in four (22.2%) of £500k properties purchased in Q3 were buy to let properties.

It just goes to back up what I stated a few weeks ago when I suggested that many investors had rushed to make purchases before 31^st March, making figures in the following months (Q2) artificially low when the 3% supplement was introduced, but in Q3 the number of buy to let properties purchased increased by 85%.

It just goes to show you shouldn’t believe everything you read in the newspapers! I can assure you the Locks Heath property market is doing just fine.  For more thoughts on the Locks Heath Property Market like this visit the Locks Heath Property Blog.

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 – 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 for house purchases, which is the highest it has been for two years.  Looking locally, in Locks Heath last quarter, £939.9m was loaned on SO31 properties alone!

Even though the Bank won’t be releasing the Q3 figures until December 2016, as I discussed a few weeks ago, HMRC have published their own preliminary data to suggest Q3 will be even better, with a massive growth of buy-to-let landlords to the housing market in that time frame.  Fascinating, as it seems to fly in the face of the popular narrative – that the uncertainty surrounding Brexit would negatively impact buyer sentiment.

And it’s not just buy-to-let Landlords that seem to be flourishing.  I am finding that first-time buyers are also a lot more confident too.  Low, and now negative, inflation has had a tangible impact on household finances and first-time buyers feel more secure in their jobs. Couple with a low interest rate environment and you have all the ingredients for a strengthening property market.  To back that up with numbers, of the £68.12bn of mortgages lent in the Quarter (Q2), £14.9bn was lent to first-time buyers (the highest proportion of that overall lending for over two years at 21.99%).

When I looked at the data for Fareham Borough Council area, the average price paid by first-time buyers (FTB’S) was £218,832, which is a rise of 3.26% from last month and a rise of 12.91% from twelve months ago.  The Land Registry then categorise the remaining buyers into cash buyers or those buying with a mortgage.  The average price paid by cash buyers was £254,319, a rise of 3.05% from last month and a rise of 12.62% from twelve months ago, whilst buyers with mortgages (but not FTB’s), the average price paid by them was £284,969, a rise of 3.14% from last month and a rise of 12.82% from twelve months ago.

What surprised me with these figures was how close the property prices, values and percentages were to each other.  It just goes to show the combination of low mortgage rates and a stable job market will continue to have a positive effect on the Locks Heath and UK market.  And that is why, while there is undoubtedly more cautiousness in the market at present than a year or so ago (among borrowers and mortgage companies alike) – mortgage rates are so competitive that they are inducing people to commit to a home purchase.

It seems the great Brexit uncertainty was over hyped, and house price growth as well as mortgage approvals, could pick up pace into 2017.