Property market in England and Wales floundering due to Brexit uncertainty
The property market in England and Wales if floundering as Brexit uncertainty continues to have an impact with sales falling and prices stagnating, according to a new analysis.
Average prices in November, excluding new build, reached £257,666, down 1% month on month and down 3.1% on a quarterly basis while the annual growth of 2.4% is the lowest it has been since 2013.
The details from the LCP analysis also shows that sales have fallen year on year by 1% but the new build market is faring better, up 4.5% on an annual basis, although down by 2.5% quarter on quarter. New build prices at £297,986 represent a 15% premium over existing stock.
‘It appears that we are now seeing the uncertainty that has been permeating the London market spreading to the rest of the UK as we approach the Brexit D-Day,’ said Naomi Heaton, LCP chief executive officer.
‘With transactions falling, average prices stagnating, a series of residential taxes over recent years and a deferred vote on the current Brexit deal, the UK housing market is in the middle of a perfect storm,’ she pointed out.
‘Without a clearer picture of what to expect after 29 March 2019, it is unlikely that there will be any material change to the status quo,’ she added.
The report also shows that in Greater London average prices reached £625,457 in November, up just 0.8% year on year and down 0.4% on a quarterly basis, the lowest growth since the Global Financial Crisis.
Annual sales are also falling, down 4.1% while in the new build sector sales are down a more substantial 19.6% although new build prices at £734,701 have a 20.2% premium over existing stock.
‘Whilst investors may be motivated to buy into a globally attractive market when prices are softening, for the majority of domestic buyers this is not good news. Coupled with the Brexit chaos and its implications for the local economy, one can foresee continuing falls in transactions and price stagnation,’ Heaton explained.
In the prime central London market prices and sales continue to fall. The average price in November was £1,859,365, down 2.7% month on month and down 5.9% quarter on quarter. Sales in this sector fell by 14.7% year on year and are now down over 45% since 2014.
New build average prices at £3,390,716 have a premium of 72.7% over existing stock and sales are down by 44.2% to just 133.
‘The historically low levels of transactions are now not only having a tangible impact on estate agents, but also the Treasury. The revenue from stamp duty for the first three quarters of 2018 is down by £685 million on 2017,’ said Heaton.
‘These already low and falling levels in transactions and prices have, no doubt, been exacerbated by the toxic atmosphere created by the UK Brexit negotiations. The recent leadership challenge, whilst voted down, can only add to uncertainty,’ she explained.
‘There is, however, a significant weight of capital poised to make its move. There is clear evidence that more experienced investors are returning to the market to capitalise on extremely discounted prices and sterling depreciation,’ she added.
‘There have been several instances in recent weeks where assets have attracted competitive bids and transacted in a matter of days. It is possible that this is the first sign of a long awaited bounce back,’ she concluded.