Impact of Brexit on the UK Economy
Currently, the total value of the UK housing market is more than £7.14 trillion. Some of the key economists, financial organisations and journalists were surveyed by Bloomberg News, and the views of 10 economists were recorded who said they did not agree with the remarks of BOE Governor Mark Carney about the plunge in home prices by thirty-five per cent in three years in case of no-deal, in one of the worst situations.
Savills believes such could be one of the extreme situations when the country's financial stability becomes an issue. Seven out of ten economists said the prices would gain in the range of 5 to 10 per cent, even in the conditions of soft Brexit, two said the prices would gain more than 10 per cent, and only one felt the prices might flatten or decline.
Most investors believe Brexit has been responsible for creating uncertainty in the market where some impact on the economy will be felt due to regulatory transformations leading to low job creation, affordability and tax issues.
The worst price fall was seen in 2007 when the prices fell by 19 per cent from Q3 2007 to Q1 2009. However, experts do not agree that housing prices will plunge in the coming months by more than 10 per cent, even in the worst conditions.
Rightmove said the prices grew 0.7 per cent in September, and sales were predominantly higher in most of the regions, and Nationwide stated that in August, asking prices grew of the bought-to let property for sale in the UK.
Experts find the prices in Central London will grow at the rate of 4.7 per cent in the next five years, and the rates in Greater London will rise at a 12 per cent rate.
Fresh Supply Needed in Some Regions
The government needs to improve housing in cities such as Liverpool and Manchester and replace the existing stock with new. The growth of cities such as Manchester was restricted by poor housing supply for the new workers -the millennials and Gen Z.
A study concluded by Colliers International found the sectors that produced the highest number of jobs were media, telecom and technology, healthcare, banking, legal and government, but the housing supply fell below requirement.
Also, one of the biggest problems of the growing cities was the lack of good homes at proper locations and property for sale in the UK. Proper distribution of the residences is required where everyone can use the housing supply.
As per another research by Sky News, the UK is facing a mini UK housing crisis growth; hence, the government needs to plan fresh housing projections and create new targets to meet the growing demand of the rising population in some cities.
The housing pressure on some growing regions such as Scotland and Northern Ireland is not due to the lack of supply but mainly because people are moving out of the city and seeking jobs in other regions.
At the conference of UK housing associations, Prime Minister Theresa May said she would allocate an extra £2 billion towards social housing to provide stable housing. The associations are preparing to secure land to build these new homes. Also, the prime minister said she remains committed to the help to buy a program to promote homeownership.
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