It’s no longer news that Brexit and it’s yet to be concluded ending has brought a lot of twist to several businesses, organizations and in fact homeowners. Therefore, the news of Stagnation hitting the price growth on houses in the United Kingdom didn’t come as a surprise when Julia Kollewe took to The Guardian’s website to announce this.
Julia announced that the average price of houses
Although Halifax which happens to be one of the leading Mortgage lenders in Britain said the average cost of a home had increased by a relatively low rate when compared with November reported another Guardian article. However, this was observed to be a short term success rate as the price growth has hit a flat with less than 90 days before the United Kingdom is expected to leave the European Union.
According to Britain’s biggest building society, yearly house price growth was almost ground to a halt in the just concluded January. This was as a result of the fears surrounding Brexit and it has deterred buyers. In the recent reports from Nationwide, the average price of a home increased by 0.1% from a year earlier to £211,966 in January. This stands as the smallest annual gain ever observed since the stall in February 2013, when the rate was zero.
The values of property were high by 0.3% in January as compared with the previous month when a 0.7% monthly decline was recorded in December 2018.
In a recent interview, the chief UK economist at Pantheon Macroeconomics, Samuel Tombs said there is a huge possibility for annual prices of home to go into a declining way before long. “The number of prospective buyers which doesn’t seem to be reduced but is on the uprising will likely wait a few months for the uncertainty surrounding Brexit to fade. This largely forces sellers to lower the asking prices on properties in a bid to attract braver buyers in the interim” Samuel Tombs further said. “As a result of this, year-over-year reductions in house prices in the near-term should not be considered as impossible.”
On the other hand, some people are seeing things in a different light and one of such people is Hansen Lu. Hansen is a property economist at Capital Economics and he predicted that the prices of a house would rise by 1% this year, unfortunately only if a Brexit deal was done. He said a no-deal Brexit would lead to flat prices or even cause a gradual fall in the prices this year. However, Hansen believes Britain would escape a house price crash irrespective of the outcome of Brexit.
Even if a Brexit deal was completed, Lu believes the market would still be held back by the high prices of a house. And any economic turnaround that would follow the Brexit deal would come hand-in-hand with the rising interest rates.
Lu also believes strongly that these rising rates would keep demand growth contained. However, contrary to Hansen’s belief, the EY Item Club forecasting group expects the prices of a house to increase by 2% in 2019 if a deal was to be completed. Unfortunately, if a no-deal Brexit happens, decline by 5% should be expected. Nationwide’s chief economist, Robert Gardner said consumer confidence deteriorated in December and surveyors reported a further reduction in the new buyer inquiries towards the end of 2018 this was also relayed in the Guardian. In addition to these consumer-related issues, the number of properties coming on to the market also slowed.
Since the Brexit vote in 2016, the UK housing market has slowed as compared to the annual house price growth measured by Nationwide to be 5.1% back then.
However, there exist big regional variations to the pricing of houses. This is because, while prices have been falling in London and parts of the south-east, property values are on the upswing and punching the ceiling in the Midlands and northern England. According to Zoopla, in Birmingham, Manchester, Leicester, Leeds and Liverpool Prices have risen at double-digit rates since the referendum.
A lack of affordability and Higher stamp duty are the main reasons to have dragged down the London market. However, on the average property value in the capital stands at £481,200 and is still way above many other cities. This fall in house prices has affected Foxtons, the London-focused estate agent. This was revealed on Thursday when he said on its underlying profits would fall to £3m in 2018 as compared to the £15m in 2017, with sales revenues dropping to £36m from £43m.
Nic Budden, the firm’s chief executive, said: “2018 was one of the toughest sales markets the firm has ever experienced with transactions deteriorating from last year’s historically low levels.”