Commercial property
Investor demand for UK commercial property remained muted, but continued to outpace supply due to the lack of properties coming onto the market.
There was strong investor appetite for distribution and warehousing properties; prime office space in UK cities outside London; flexible serviced offices; and multi-use buildings that combine residential, office, leisure, hotel and retail premises. However, there were reports of a moderation in demand for commercial property from local authorities, pension funds and high net worth individuals.
Contacts reported that heightened uncertainty about Brexit and the political landscape caused some domestic and overseas investors to pause the construction of projects, contributing to broader constraints on supply.
Contacts expected capital values on non-prime retail premises to continue to fall in response to the ongoing shift towards online purchasing.
Housing market
Housing market transactions continued to be dampened by Brexit uncertainty, with activity largely restricted to ‘forced’ moves due to life changes.
Contacts noted that that more viewings were needed to achieve sales, transactions were taking longer to complete, and fall-through rates had increased.
House prices were reported to be flat in most areas. Contacts said prices were falling in some areas – mainly London and the South East – although affordability continued to be a constraint in that part of the UK. There were increasing reports of surveyors being more cautious about valuations.
Strong competition among mortgage providers coupled with lower housing market transactions was pushing down lending rates – in particular for creditworthy borrowers. Activity was concentrated in re-mortgaging, as homeowners sought to lock-in fixed-rate deals.