Uncertainty in the market continues to slow the growth of the UK housing market, but price growth is evident in Scotland, Wales, and the Midlands. In August of this year, house prices remained flat, with an annual increase of only 0.6% as reported by Nationwide. Due to this, house prices will probably stay flat for the rest of the year, lower from the 1.5% prediction late last year.
The delayed return in the housing market is due to economic and political uncertainty. After a reduction in housing transaction numbers from April to May, it slowly picked up again last June to July. The RICS Survey for July offered some relief as activity levels are projected to gain pace.
Strong Price Appreciation in Scotland and Wales
It is easy to blame the Brexit impasse as the cause of all this uncertainty in the UK property market. Price falls in the South East, and London overshadows continued growths in Wales, Scotland, and the Midlands. In the past year, nine out of the top ten highest price appreciation came from either Scotland or Wales. Annual growths in West Dunbartonshire and Blaenau is at 11.6% and 17.9% respectively. London is among the weakest with house dipping by 2.9%. South Bucks and Westminster have prices falling by as much 5.8% and 7.2%, respectively.
UK Global Real Estate Investment
The UK’s long-term average share of global real estate investment is approximately 13%. The level of UK investment moved in parallel with the worldwide total until the early part of 2016. A notable divergence occurred in the second quarter of 2016 as a result of the historic Brexit vote. Most investments dipped sharply and continued to fall even more after the referendum.
The increasing uncertainty in the UK market resulted in a decreased transactional volume. If the UK did not have a referendum and the market continued to synchronize with the world market, would it have been better?
If the UK maintained its 13% share in the global investment from the second quarter of 2016 to the second quarter of 2019, the market would have an additional of €90 billion worth of real estate transactions.
However, this could also mean that the market yield stability in the UK would trade at significantly discounted prices – a situation that would make it harder for the market to rebound.
The price falls could not have come at the most opportune time. The settlement of Brexit issues would allow the UK property market to rebound easier, mainly for Euro investors who benefit from a weak pound.
UK Property Market Outlook 2019
Savills reports that the UK property market will continue to experience more price falls or cooling down of the market due to looming no-deal Brexit. While investors are applying a wait-and-see approach, the occupier demand in the UK remains robust.
In the same report, Savills indicates that figures for commercial property investment fell by 31% year-on-year as investments outside London dipped by 33%.