Bank Of England Predict Property Decline Amidst Brexit Uncertainty
Despite the number of sales received for registration increasing slightly between February and March, since the turn of the year sales received for registration have fallen by 11%.
According to the HM Land Registry’s Price Paid Data for March, the 99,372 sales received for registration in January have dipped to 88,531 in March, the most recent data source available.
Although the government’s Help to Buy statistics suggest that more people than ever are using the scheme to buy a new home, the overall market for new build homes is facing a considerable decline in March.
The 13,129 new build home sales for registration represents a 19.7% decrease on the figures from March 2018.
As Brexit continues to put the brakes on residential and commercial activity in the property market, the Bank of England have warned of sustained decreases to property prices through 2019.
Furthermore, the Bank of England have predicted that UK property prices could fall by 1.2% this year.
The Bank of England have attributed these predicted figures to the reduction in the buy to let sector caused, in part, due to surcharge increases in Stamp Duty Land Tax (SDLT) and the increased the cost of moving.
The Bank of England Inflation Report for May, stated:
“In the MPC’s central projection, house price inflation and housing investment growth are expected to fall further in the near term. That is consistent with indicators such as the RICS survey and housing starts.
“Further out, both are expected to pick up as headwinds from uncertainty dissipate and stronger income growth supports the demand for housing.
“There are of course risks around these forecasts. On the one hand, more persistent uncertainty could weigh on house prices, and housing investment could fall by more than projected ahead of the withdrawal of the Help to Buy scheme. On the other hand, a more rapid dissipation of uncertainty could lead to a stronger pickup in house price inflation and housing investment growth.”
Lucy Pendleton, director of independent estate agents James Pendleton, commented:
“What the UK needs is for transaction levels to return to pre-crisis levels because that’s what will impose fair value on more of the markets that have been seizing up over the last few years.
“The regions have also been seeing incredibly strong performances lately even while prices in London have been falling. The capital normally leads the way so, if these forecasts are borne out, this is the rest of the country playing catch up as it has always tended to do. In the long run a correction in prices is probably what our housing market needs.”
As a conveyancer, are you worried by the declining interest, stock and property prices in the current market?