Rightmove’s latest house price index has recorded an increase of 0.9% in the average house price this month. This shows a recovery from the falls seen in July and August. The average of £309,122 suggest confidence has returned to the market, with asking prices approaching all-time highs.
With the turbulence seen since the referendum vote in June now easing, house prices are currently £1,349 below the record levels that were reached in June – according to the largest monthly sample of property prices. Prices have risen across the Country in every region aside from the Northeast and Southwest. Property in Greater London has seen the largest increase of 2.4%.
In the North, there has been an 11% drop in the number of houses for sale compared to last year, but sales have been up 3% – suggesting it is a seller’s market. In the South, by contrast, there has been a 16% increase in the number of houses for sale, but sales have been down by 10% – suggesting a buyer’s market.
Rightmove’s Housing Market Analyst Miles Shipside has noted that estate agents in the North reported a quiet week or two after the vote to leave the European Union – but activity picked up soon after, with decent levels of buyer enquiries and sales being closed shortly after. In the South, however, agents have seen a more prolonged hesitancy among prospective buyers.
One possible reason why house prices have continued to grow despite the uncertainty of Brexit is the demand for property. Britain currently builds around 100,000 homes less per year than are actually needed to match demand. In 2015, 250,000 were needed – but only 142,000 were built.
Looking forward, an exit from the EU would likely mean reduced immigration and therefore less demand. It would also mean the number of foreign buyers would be reduced. However, 9% of construction sector workers come from the EU (1 in 3 in London, according to the International Business Times), and a hard Brexit could mean cuts to the construction workforce. Consequently if Britain does leave as planned, it may still struggle to provide the number of homes required to meet demand. While a shortage exists, prices should continue to rise.
The Centre for Economic and Buyout Research (CEBR) has predicted growth will continue to rise despite the result of the referendum, with houses costing typically £44,000 more by 2021. However, it predicts price growth will slow in the short term. London, where prices are already high, will see the biggest slow down as it relies on a large number of overseas buyers.
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