Daily Management Review

Brexit knocked down the UK mortgage market


09/15/2016


Volume of mortgage lending in the UK by the end of July decreased by 12% compared to the same period last year. This is evidenced by the UK Council of Mortgage Bankers (CML).



nyphotographic.com
nyphotographic.com
Volume of mortgage loans in July amounted to only 10.6 billion pounds ($ 14 billion), up 13% compared with June. There were 58.1 thousand of loans issued for purchase of housing in total in July.

CML experts believe that it is too early to draw any conclusions on whether the decline in July was a temporary response to the Brexit decision, or it is beginning of a slowdown in the housing market.

Volume of loans issued for purchase of housing for those who already owns one residential property fell in July by 21% yoy to 3 billion pounds. This is linked to the fact that the country has earlier introduced an additional stamp duty on purchase of houses for this category of citizens in the amount of 3% of project cost.

The housing market in London is overwhelmed by expectations of low capital inflows, while elite real estate market has suffered from an increase in taxes on sales and oversupply.

This month, sales of London property are longer than usual, despite the decline in prices due to economic uncertainty, which is formed around the decision to leave from the EU.

Nevertheless, the lull will not last long. In 2018, property prices in London will increase by 2%, as the economic situation will somewhat improve. 

Experts predict that cost of real estate will grow by 4% in 2018 across the country. By the beginning of this year, prices on the market fell by 15% compared to the peak in 2014.

Housing prices in the UK have been falling in August for the second consecutive month. High prices have a negative impact on demand by reducing the sales activity, Halifax Bank analysts said.

In July, prices fell by 1.1%, in August - by 0.2%. For the three months through August, prices rose by 0.7% compared to 2014. This is the slowest quarterly growth rate. Compared with the same period a year earlier, prices rose on average by 4.1% to 213930 pounds, despite the fact that for three months, annual rate of price growth has slowed down to lows in 2013.

"Growth in prices of housing has been a trend of the past few months. Further, we can see reduction of annual and quarterly growth rates", - said Martin Ellis, economist at Halifax.

Growth in housing prices should limit demand and stop the rapid rise in prices, he said.

"We do not expect activity in the housing market in the coming months. The prices are now under pressure from the uncertainty affecting the economy, consumer confidence and their willingness to participate in major transactions. Once Britain formally launches the procedure of exit from the EU, we suspect that the situation will worsen", - said Howard Archer, chief economist at IHS Global Insight in London. 

source: bbc.com, marketwatch.com






Science & Technology

Smartphone makers will pay for pre-installing Google apps‍

Five loudest data leaks

Airbus announces Moon exploration competition

Former Head Of Google China Thinks Funding In AI Should Be Doubled By US

Germany Introduces The First Ever Train To Run On 100% Hydrogen

Germany Plans On Cyber Security Research To End Reliance On U.S. Tech

Fuchsia will kill Android by 2023: Top 5 facts about the new OS

New Study Finds Goats Interact More With Happy People

More than 32 thousand "smart" houses under threat of hacker attack

Internet addiction and children: Global plague

World Politics

World & Politics

Cyprus Cobalt Air stopped flights

Transparency International: Europe should stop selling citizenships

Turkey: We are not going to discuss borrowing from IMF anymore

Trump in your mobile phone: US is going to test Presidential Alert system

European automakers warn of consequences of tight emission controls

IATA: EU-UK flights can be cancelled due to Brexit disagreements

Ex-Brexit Minister Said A ‘Reset’ Is Needed For Brexit Talks

10 countries with the best healthcare systems