Britain’s housing market is being pulled in two directions.
There is a severe housing shortage and, according to UK Home Office data cited by The Times, there are severe delays in almost a quarter of a million applications for house builders to build homes. This lack of homes will help prop up prices because there are not enough houses to sate demand.
On the other hand, Brexit uncertainty is taking a major toll on the property market. Property website Rightmove said on Monday that house prices are being hit across the country due to uncertainty over the ultimate fallout from Britain leaving the European Union.
Miles Shipside, Rightmove director and housing market analyst said in a statement:
“As far as the price of property coming to market is concerned, the fall of 0.9% is within the range that we have seen at this time of year since 2010. With the onset of the summer holiday season new sellers typically price more conservatively and the average drop in the month of July is 0.4% over the last six years. Perhaps unsurprisingly this July’s fall is marginally larger, as political turbulence has a track record of unsettling sentiment. Indeed last year saw a seasonally unusual 0.1% fall in the run up to the May election, and a June and July price surge as a result of the post-election boost. Average new seller asking prices were up by 3.1% over that two-month period.”
In London, new analysis of housing research data from LOREMA and Land Registry by London Central Portfolio (LCP) sent to Business Insider on Monday, showed that new build sales volumes tumbled 43% on the same period last year.
Even the rental market, which usually shows continual price rises because people need a place to live no matter what and therefore rent if they cannot afford to buy, is suffering. According to estate agents Countrywide, rent fell for the first time in London over the last year.
All-in-all it looks like anyone’s guess on how Britain’s property prices are going to fare over the next year.
Supply and demand fundamentals show that UK house prices should be propped up because the housing shortage is going to be exacerbated by the lack of new builds to sell. But as the data shows, Brexit uncertainty is weighing heavily on price growth.
But we might get an early indication of which force is winning the battle over property prices as early as next month. Liam Bailey, global head of research at Knight Frank, said in his latest note to clients on the residential housing market on Friday that “September will be a pivotal month” to indicate the health in property sales.
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