04 Apr 2019
London real estate provided one of the most dependable long-term growths till 2014, where the experts believe the uncertainty around the Brexit led to a decline in property transactions by 14 percent in the city in 2018, and the transactions were 20 percent down in the last 4 years. The market is stagnated but property values would be sustained even after Brexit due to the continued ability of the buyers to borrow money. Even though there has been a decline in price in London, it is still the most expensive place to own a house with an average price at £472,000.
Foreign investment fell to the lowest since the first quarter of 2016 in the last three months as per Definitive data, mainly, over the uncertainty of the EU – UK exit. Since 2009, foreign investment in the real estate was at least $6.4 billion that grew to $22 billion in 2014 but declined after the Brexit vote to $15.9 billion. The main stamp duty reform was introduced in 2014-2015, and it has been one of the obstacles that resulted in a drop in investment. Since the introduction of main stamp duty, the investment decreased over 20 percent, and with Brexit announcement, it further resulted in a slump in transactions.
New buyer queries declining
A London based real estate company said a huge drop in properties put up for sale can be seen. RICS data find the new buyer inquiries in February declined for 6 months, and the average time is taken to sell reached new highs of 19.4 weeks. The buyers who were expected to invest in real estate are staying longer in rental accommodations. Brexit is not behind the decline in price but Brexit delays and unpredictability have been creating stagnation in the market, where the number of renewals in rental agreements has increased.
Price in Scotland and Ireland increased on higher demands
The price in Wales increased 4.6 percent in the year to January and in Northern Ireland, it increased 5.5 percent, while, the Scotland prices increased 1.3 percent to £149,000. The price in the Scotland capital is up 7.6 percent on an annual basis, down by almost 10.6 percent at the end of 2018, and Scotland remains to be one of the fastest growing cities in Europe as per Knight Frank latest index.
In Edinburg, the price of family homes continue to grow at the rate of 9.2 percent y-o-y, and the price of flats was 5.1 percent up on a y-o-y basis. The growth in the Edinburg property market is driven by insufficient supply and growing demand, where a number of prospective buyers are waiting for the Brexit conclusion. The delays in Brexit have slowed down activities, creating hesitation even for the second home buyers. The landlords want to gain further clarity on the impact of Brexit before reaching a decision.
Prices to gain in post-Brexit phase
A recent survey of RICS find Brexit to be the main obstacle for the market where more than 75 percent of the real estate agents find the uncertainties have been holding back buyers and sellers, although, the experts also state the market is stable and the prices will not spike up immediately on Brexit resolution but may gain in the post-exit phase.
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