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UK Property Market Falls Back to 2011 Levels

The UK property market has enjoyed particular interest from wealthy foreign investors over the past few years, particularly in London. However, in the face of extreme volatility in financial markets and political uncertainty surrounding Brexit, the capital has experienced a significant decline in transaction volume.

According to the Royal Institution of Chartered Surveyors (RICS), the British property market is stagnating, with activity at 2011 levels in parts of the country that had previously enjoyed the most growth in recent years such as London and the South East of the country.

As the country remains gripped in Brexit indecisiveness, transaction volumes have slumped meaning that prices and rents are likely to remain flat for at least the next year, say the RICS. The report goes on to reveal that homes over £1m are having the most difficulty finding buyers, forcing sellers to accept significant price cuts.

A large majority of surveyors in both London and south-east England are reporting falling prices, although the national picture is balanced by price rises in the West Midlands, the North West and Northern Ireland.

The report states: “Record low stock numbers, political uncertainty and the aftermath of tax changes are obstacles hindering the UK housing market, with price growth and sales activity subdued during the month of July.”

Its poll of valuers around the UK found “the softest reading since early 2013”, while south-east England posted “the weakest reading for this part of the country since 2011”.

Price Slowdown Excellent News for Domestic Buyers

The report will come as a relief to domestic homebuyers, many of whom have been ‘waiting in the wings’ for the UK property market to become affordable again. After years of stagnation in domestic buying, any kind of price deflation is set to be warmly welcomed. However, estate agents are unsurprisingly taking a very different view.

Mark Everett of the Michael Everett estate agency in Epsom told the survey: “The market is desperately price-sensitive and too much stock is unrealistically overpriced.”

In Ipswich, David Knights of David Brown & Co said: “The election result and all the talk of Brexit has had a profound effect on the UK property market, and with high stamp duty charges, sales as well as new instructions are now suffering. Add to this the holiday season and the market is not very clever.”

In East Grinsted, Phillip Hiatt of Your Move said: “Vendors of older stock have to look at price reductions to achieve a sale.”

Property Buyers Largely Lost Interest in London’s Prime Market

In London, surveyors blame stamp duty, changes in tax on buy-to-let properties and Brexit for a sharp slowdown in the market. Stamp duty on a £1m home in London – not uncommon in many parts of the capital – now costs a buyer £43,750, prompting campaigners to call for cuts to the tax.

“[George] Osborne’s hike in stamp duty has had a negative effect. Removing interest relief for landlords is causing some to sell, [with] few sales now to investors,” said Allen Fuller estate agents in Putney.

Rents are also falling in the capital. Simon Aldous of Savills said: “Rents continue to fall slowly. We have seen seven consecutive quarters of marginal falls in rents.”

London’s Loss is Liverpool’s Gain

In areas and regions outside London, valuers are reporting buoyant activity, particularly in the north of the country. In Liverpool, Derek Coates of Venmore described July as “a strangely busy month considering external factors and the time of year. The investor market has been extremely busy, particularly from out-of-town investors.”

This is consistent with a widespread shift investors in the UK property market have made from buy-to-let in London to booming regions like the North West of England. Liverpool represents better value to domestic buyers too and unlike London, the city is seeing increasing transaction activity across its residential and commercial property markets.

In contrast to other regions in the UK, the North West is undergoing significant transformation, with construction output at levels much higher than elsewhere in the country. United Property Invest has an exclusive relationship as Master Agent to one of the North West’s most progressive developers, Signature Living.

Contact us today to find out more about the exceptional value offered in our portfolio investment opportunities and how you can create a high income-stream and significant capital gains over a minimum term of three years.