As the UK’s departure from the EU gets ever closer the pressure on house builders sales rates increases. Anecdotally, senior figures have told me that whilst footfall is still good, sales rates are at the bottom end of what is expected at this time of year and sales directors are using all the tools available to them to keep closing deals.
Keen to avoid snowballing a drop in market confidence, all the housebuilders reporting half or full year figures since Christmas are putting out a particularly positive narrative.
Gleeson Homes’ statement illustrates this perfectly: “Our target market remains strong and our customers have maintained their confidence. We do not see any signs of customer caution.”
John Tutte, CEO of Redrow was more specific: “The market fell away at the end of November into December about the time of the (Brexit) meaningful vote so we didn’t generate the leads in December which impacted January. But there has been improvement into early February – overall we are about 6% down and if you’d offered me that in December I would have taken it.”
The good news is that if buyers are delaying a buying decision there may be some pent up demand coming to market later in 2019 – if we come out of Brexit economically unscathed!
Lloyds’ bank has recently compiled an interesting survey to compare housing affordability of UK cities. Using the simple metric of average house price versus average earnings they created an affordability ratio.
As a starting point, it’s interesting to note that in the five years between 2013 and 2018 average house prices in UK cities grew from £180k to £248k, a rise of 37%. In contrast, city wages grew just 11% to a little over £34k over the same period.
So where is the greatest disparity between wages and house prices and where is home ownership more affordable as a function of earnings?
Seven cities average house prices are more than ten times average salaries. Greater London, Winchester, Chichester, Truro, Oxford and Cambridge and Bath.
And if you want your salary to go the furthest in the property market? Then Stirling is the place to live. If you prefer to live in England then Bradford has a house price to salary ratio of just 4.6 and for Wales, Swansea comes in at 5.5.
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