What’s Next for the Housing Market?
After what looked set to be a terrible year for the post-Brexit housing market we have seen tentative signs of recovery. Recently the housing market in England and Wales has seen promising growth, putting the average house price at £300,169. This is a 3.1% growth since January 2016 and should inspire some confidence in homeowners and investors alike. There has been much uncertainty in the future of the UK housing marketplace since the nation voted ‘Leave the eu’ in June last year, following an equally disruptive increased levy on stamp duty.
Brexit house prices in London
London and the South East especially felt the effect of this as high-value prime postcodes were hit by an immediate decline of foreign investment buyers. This, in turn, led to the cancellation of many deals soon after the news of Brexit broke and to house prices falling.
However, the actual effects of Brexit were soon realised and capitalised on; the drop in UK house prices in London’s most costly boroughs welcomed a host of foreign investors who were after a cheap slice of the London property market. This has led to the first rise we have seen in 9 months, with year-on-year growth reaching 1.2% and the average house price reaching £598,001. This was largely due to house price growth in affordable areas such as Barking and Dagenham, however, there was also development in higher-end markets. Wandsworth saw a 3.3% rise and Kensington and Chelsea sat at 2.7% rise in house price.
Brexit housing market overall
Outside of the London bubble, growth has remained positive. The most striking example was the city of Hull, which saw a 16.8% increase. Average house prices in Hull named the UK City of Culture 2017, has seen an impressive value jump of £19,072 on average. A similar promise was seen in the East Midlands, with Rutland seeing a growth of 12.4% over the year and the East Midlands as a region increasing by 4.5%.
Though this is great news for investors and developers, it may not be music to the ears of hopeful first-time buyers, especially those who were hoping to take advantage of the uncertainty over Brexit. The Brexit house price crash is a particularly unfortunate position as rental prices are also soaring. The Royal Institution of Chartered Surveyors has predicted a 25% increase in rents in the coming years, in parallel with poor progress in affordable housing development. These events will only continue to squeeze the growing hoard of renters across the country when we leave the European Union.
These recent developments also mark a period of huge growth over the last 14 years; in fact, average annual house prices (in England and Wales) have now doubled from £150,000 in November 2002. Prices look set to rise steadily, and will likely outstrip real wage growth and affordability of homes across the UK. This will inevitably create tensions at both a community and government level.
Hopefully, the recent call from Government to force all local councils to have a plan for affordable housing developments should offer some hope going forward. Yet these figures remind us of the scale of the challenge at hand, our ‘broken’ housing market does not have one quick fix, perhaps not even the new £50,000 pop-up homes.
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