UK House Prices Set to Rise in the Next Five Years
One of the positive effects of the Brexitis the increase in the house prices in the UK. Analysts have predicted that the value of a home across the UK will improve by 13 percent by 2021. The area that will have the most gains will be the South-East, with an estimated increase of £53,000. Scotland will also experience a 9 percent increase in line with the area north of England.
The increases in the value of houses in the UK will depend on the Brexit negotiations with poorer borrowers, as well as new regulations. After leaving the European Union, there were a lot of uncertainties in the real estate market. And these led the market to change its gear.
Buyer confidence has become fragile after the Brexit vote, but the property market is less affected by it compared to the financial market. First-time buyers will rely on their parents, as well as on government schemes. It will be difficult to own a first home without getting financial help.
The Rate of Rent in the UK
Rent rates will increase faster than house prices in the next five years. By the year 2021, the rent will be 19 percent higher than the rates today. On the other hand, house prices will see an increase of 13 percent during the same time period.
The Brexit and politics will have a huge impact on the market. Taxation is utilised as a housing policy tool. For instance, tax reliefs are reduced to buy-to-let landlords. There is also a high rate of stamp duty applied at high-end markets. Second homes and investment properties are also taxed higher compared to first homes.
Housing Activity in October
According to Halifax Index for October, housing activity was down compared to that of last year. And while the house price growth has softened, the rate of valuation remained healthy. Another index showed that house prices remained unchanged in October, which was the first time in 16 months. However, analysts saw indicators that consumers are becoming more confident with the market, as house prices were up for two straight months.
They saw the slowdown as the result of affordability pressures that buyers have faced, which led to the lower housing demand. The low mortgage rates and shortage of properties for sale will help support the levels of house prices in the coming months.
With the economic and political uncertainties, the housing market will be in a rocky course in the coming year. However, analysts are still optimistic that prices will continue to rise in the near future as the market will correct itself after the initial shock of the Brexit vote.