Factors restricting the UK real estate growth


Factors restricting the UK real estate growth

16 Jul 2019

UK real estate growth 

As per Zoopla research, almost one-third of Southern England homes are experiencing a slowdown in the home price. The report finds the regions in the South East, South West and East may experience a slight fall in price in 2020 but the fall in price will be short-lived. Some areas like Bath prime locations, Cotswold and Poole continue to register gains in price. A strong bounce in price was reported in the house price despite Brexit, as per the Land registry records, which found the markets in North and Wales, continue to gain. The housing market data find the overall price in England (month on month) in April increased by 1.4% and the highest gains were registered in the North - East Midlands by 2.9%.

London property experts claim the market dropped in June by 0.7 percent (as per Nationwide), which took the annual tally to -3.8% but the agents find the markets recovering from the Brexit blow. The resignation of Theresa May and the possibility of no deal hampered prices in some areas. The South East regions having higher buying costs face unaffordability issues. Even the capital city remains unaffordable for average buyers.  London, recently, gained in the last few weeks as the buyers realigned their prices and are now ready to pay more for the capital city properties. The region in Yorkshire & Humberside continues to grow with the rate of 3% YOY.

Halifax reports the prices are 5.7 percent higher YOY as it were in the same quarter last year. The ONS data suggests the house price increased across the UK by 1.4 percent in April.

Issues faced by the buyers

Affordability and regulatory framework continue to pose risks, where the average buyer is unable to plan a home investment. Some buyers are waiting for the BoE to announce the rate cuts which will have a direct impact on their mortgage payment, even though, the current rate is significantly low and a rate cut will not have much impact on the average rate.  Help-to-buy scheme is not very popular as many buyers are facing issues related to the sale of properties or in loan repayment. The rules allow landlords to claim 25% of the mortgage interest payment through their rental income, which will be stopped up in April 2020.   The markets continue to remain unexpectedly high as the tax bills are growing.

How to gain funds for home buying?

To buy a house one requires the best financial option to make the investment successful without getting trapped in unrealistic payment obligations. Buyer can get conventional mortgage loans through banks, credit unions or mortgage banks that provide on the basis of credit history and score, and it covers the borrowers’ current mortgage. Such loans may require sufficient cash to cover payment on both loans for half year (where the rental income from the property is not considered).  Such mortgages may require a down payment of 30 percent. Equity loan provides another option to borrow up to 80 percent of the equity. Hard money can be used where the value of the property is considered rather than personal income or credit.   Personal relationships or business relationships based loans or financing are other options.

To know more about UK properties, click Hamilton International Estates (www.hamiltoninternationalestates.com).

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