Housing market confidence continues to grow in some UK regions, and the rebound in prices was witnessed in July 2018- as per RICS, while, the investors are highly positive about sales and prices. The survey conducted by Ulster Bank and RICS claims the surveyors were optimistic about housing markets and expected growth in activities in the housing sector. Home prices grew in July by 3.3 percent (y-o-y) and the annual prices of home are expected to grow at the rate of 2.5 percent as per Halifax. HomeLet found average rent grew 3.3 percent in London in July (y-o-y), whereas, the average rent of the UK (other than London) grew 1 percent. In July, the growth was 1.4 percent more as compared to June 2018, and the housing cost average was reported to be £230,280.
Growing rents due to the housing crisis
According to the survey conducted by online property firm HouseSimple - In July, new property listing fell in the UK by 6 percent. The survey was conducted on 100 cities (and towns), and the highest drop in supply (as per new listings) was recorded in Blackburn, Winchester, and Lichfield. In London, new listing increased in June, but in July there were significant reductions in most regions. The highest fall in listing in London was reported in Camden.
RICS claimed due to supply shortage rents will continue to grow in the UK. The number of people looking for rental homes grew, nevertheless, supplies reduced leading to higher rents. The sharpest growth in rent is expected to be seen in East Anglia and South West.
Many landlords are selling properties due to a rise in tax burden and rising costs. In the last few months, many buyers stayed away from investing in buy-to-let due to change in tax regulations and an extra 3 percent stamp duties. Brexit and market volatility kept buyers restrained and Halifax expects the market to remain the same in the coming months but there has been a rise in mortgage affordability and mortgage approvals, and earnings continue to rise, hence, pressure on housing finance will ease leading to rise in buying.
House price growth by region
In 2017/2018, housing prices grew more than wages and it reduced overall activities in housing. Inflation may keep first-time buyers away from the markets. Some regions in Scotland and Edinburgh had a kind of boom in property markets but mostly the lack of stock and a lesser number of quality homes is pushing people to seek alternative locations.
Most investors seek two-bedroom apartments – which are considered suitable due to sustainable demand. In Edinburgh, the rent of a four-bedroom house grew at an average price of 6.8 percent. Overall the rents grew 4.8 percent in Edinburgh in Q2 2018, where it takes just 20 days for the property to let.
Halifax economic advisors believe the price gains will be in the range of 2 to 3 percent in the rest of the year. As per RICS, in twelve months, rents will grow by 2 percent.
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