UK property asking price increase

UK property asking price increase

19 Apr 2019

Property prices UK

London real estate has been safe for long-term growth where Brexit caused stagnation and the transactions were down in the last three years where with the brief reprieve from the exit from the EU, the market witnessed a positive growth in last weeks. The asking price of houses increased for British homes in the first week of April over a year, where clear signs of recovery and bottoming out could be seen.  At least a 1.1 percent monthly rise in asking price was reported by the Rightmove. The property market data show the decline in price stopped in the early months of 2019 and now the market has stabilized, which spurred buyers to take actions.

Buyers are relieved that the impact of Brexit will be less than expected and many want to gain from the current static rates and low fixed rate mortgages. Buyers are also motivated by the rise in rents in the cities like London where rents rose 3.7 percent in March to £1,737 pounds a month (Hampton’s data). The rent in the capital is at least 2.3 times higher than in other regions.

Since 2016, the price grew double-digit by 16 percent in Birmingham, and in Manchester and Leicester price growth was 15 percent, mainly, due to increase in the inflow of investment towards regeneration projects, house building, transportation, and infrastructure development, but still, the price is low in caparison to the capital. The domestic and foreign investments remained strong, and in the month of January 2019, the residential properties were 1.3 percent higher than a year before.

New home construction remains slow

In 2018 summer, the Prime minister assured of 300,000 new home constructions that will be available by the middle of the decade as progress has been made in this area through multi-billion funding and planning reforms, but even after the creation of 220,000 new homes in 2017-2018, the progress remains slow. A recent study by the Litchfield's states 50 percent of the local authorities may fail the home building test and only 44.1 of the authorities are expected to meet the new home plan demands.

Further, overseas investment in UK properties continues to grow where the investors from UAE and South Asia see such properties more attractive, in terms of, growth and rental earning. The shift of investors to regions Dublin, Paris, Portugal, Spain and other territories in the last few years was, mainly, due to the Brexit uncertainty. Paris growth rate was, on an average, 6.2 percent, where the higher end properties remained attractive and lesser priced. Dublin offers a high-end London neighborhood at a reasonable cost.

Not just the residential and commercial markets, the real estate healthcare investments were up 13 percent as per documented transactions (report by Healthcare Capital Markets 2019) that found the total value of the transaction was £1.49 billion in the last year. The overseas investments grew 20 percent, almost equivalent to 2013 rates when 70 percent of the investment was made from overseas.

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