The housing market in the UK
The UK housing markets suffered a downturn in the last year but the prices are estimated to remain flattened for some time and then, it is expected to pick up from 2020 (as per PwC report), especially, in the conditions when Brexit is achieved in an orderly manner. This year the price increased 1 percent as compared to last year, even as, the prices have been falling since the middle of 2016, that was negative in July 2018 and it remained at the level for some time. In the last year, the strongest growing markets were of the Midlands and North West, which continues to be the strongest performers. In Scotland, the markets are predicted to gain at the rate of 14% in the next four years, where the growth is expected to be 1.7% in 2019 and 2.4% in 2020. The growth rate is expected to be 4.7% from 2021 to 2022.
Rents continue to grow
Rental affordability issues continue to grow in the capital city. The rental affordability is estimated to be at a low for the young workers in the age from 22 to 29 years as they spend over 50% of their earnings on private rent in London. In his first statement to parliament UK’s new Prime Minister Boris Johnson announced to increase investment in vital infrastructure. There was no statement issued for housing but sources said there were plans to channel money into new part-rent and part-buy tenure projects to shift attention from social housing. The ministers said currently, the cost of housing and rents are higher than ever and the government needs to devise plans to ensure more young investors can buy homes in the cities where they are working.
In the first quarter of the year, London was one of the weakest markets and the policy changes have affected the buy-to-let markets, which has been a reason for the decline in the price of London homes. The prices in south England are above the pre-financial crisis and in northern England and Wales; the prices are almost close to the levels of 2007. The Northern Ireland price is almost 35 percent lower than the highs of 2007.
The UK mortgage borrowing increased in June indicating the start of a stabilizing trend. The latest figures by BoE confirm -house purchase increased and is higher than expected in June. The net mortgage borrowing is expected to be £3.7bn that is more than May. The annual growth rate of mortgage lending is expected to remain stable at 3.1% where it has been since the EU 2016 vote. Due to housing market trends, the economy suffered a flat-lined growth; although, the employment data continues to be positive and there has been a rise in the national minimum wage. The recent data by RICS indicate people are now less pessimistic about the property markets due to improved purchasing power and strong employment growth. The BoE found an increase in consumer credit growth, which was down since 2016, was falling to 5.5% in June from 5.7% in the previous month.
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