UK House Price to Fall?

The Royal Institute of Chartered Surveyors said that supply of homes fell drastically in June. Demand dropped rapidly as well.

RICS chief economist Simon Rubinsohn said that looking ahead over the next 12 months, sales expectations have turned negative for the first time in four years, with 12% more contributors expecting transactions to fall rather than to rise.

“Significantly, over the next 12 months the dip in prices is only expected to persist in London and East Anglia (net balances of -39% and -34% respectively) and longer term, prices are still expected to rise, albeit a little less than previously anticipated, with a cumulative increase of 14% projected for the next five years”, he added.

According to RICS, the South has been mostly affected, post Brexit and buy-to -let stamp duty increase.

The managing director of Belvoir, Dorian Gonsalves, said that the government needs to work very fast and efficiently to reassure the overseas landlords about the uncertainty.

Emma Falco, co-owner of Belvoir Peterborough, states: “In my opinion, investors should still consider property as one of the best places to put their money. For example, in Peterborough, an average rental property would generate a landlord a 9% return on the capital they employ. Investors will not get anywhere close to this by leaving their money in the bank. Regardless of what happens to property prices in the short term, the demand from tenants is ever growing.”

However, there has been sharp fall on the construction industry since February 2014 due to government cuts to local authority spending as well. Theresa May’s new ministry of infrastructure will have to find a better way to boost growth.

“The fall in May 2016, taken together with the strength of April’s figures, continues a longer trend of broadly flat output growth since the start of 2015,” the ONS said.

“Within all new work, there were decreases in all work types, except infrastructure. The main contribution to the decrease came from private new housing.”

The chief economist at financial data provider Markit, Chris Williamson said the drop in construction output adds to “what’s looking like an ugly run of data for the sector”.

“It looks like there’s worse to come; possibly much worse. Markit/CIPS PMI survey data recorded the steepest contraction of construction activity for seven years in June as projects were put on hold in the lead up to the EU referendum. Housing and commercial construction were especially badly affected,” he said.

There is still an unclear picture of whether or not the house prices will fall or not as yet.

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