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Global weather vane! UK house prices fell for the first time in six years

Time: 2018-02-13         Source: Wall Street         Author: Wall Street knowledge

According to a public report released by the British housing agency Acadata on Monday, the overall growth rate of UK housing prices in January was down 0.4% from the same period last year. This is the first annual decline in UK housing prices since 2012. The London region recorded the most serious decline since the 2009 financial crisis with a 4.3% decline.

The predictions of the then Chancellor of the Exchequer George Osborne were gradually fulfilled, and the Brexit would cause a sharp shock in UK housing prices.

According to a public report released by the British housing agency Acadata on Monday, the overall growth rate of UK housing prices in January was down 0.4% from the same period last year. This is the first annual decline in UK housing prices since 2012. The London region recorded the most serious decline since the 2009 financial crisis with a 4.3% decline.

What makes buyers more frustrating is that since the interest rate hike in November last year, the Bank of England said last week that if the UK economy maintains its current operating trend, the Bank of England's benchmark interest rate hike may accelerate. This may put further pressure on the property market.

According to Bloomberg News on February 8, Simon Rubinsohn, chief economist at RICS (The Royal Institution of Chartered Surveyors), said: "The latest internal analysis shows that housing transactions will remain quite sluggish in the coming months. The records above show that undersupply remains the most critical challenge."

First fell in six years

Since May last year, the year-on-year growth rate of UK house prices has fallen for eight consecutive months. In the period from 2012 to 2016, the growth rate of housing prices in the UK continued to rise. The highest point of growth in the past six years occurred in August 2014, and in February 2016, there was another small high of 9% growth.

However, since then, the overall growth rate of housing prices in the UK has been in a downward trend. Except for the small rebound from February to May of 17 years, house prices have been accelerating since May. This has to be reminiscent of the continuing impact of the Brexit event in June.

Prophecy of the former Chancellor of the Exchequer

According to a Reuters report in February of the 17th, EU immigrants working in the UK in the fourth quarter of the 16th year saw the biggest decline in the same period in 20 years, indicating that the fall of Brexit and the pound sterling weakened the attractiveness of the UK. The British economy relies heavily on foreign labor. The Brexit event has led to a large outflow of immigrants from the EU, which has undoubtedly reduced the demand for home purchases in the UK, and London, the largest immigrant city, is the first to bear the brunt.

As early as 2016, the BBC reported the warning of the British Chancellor of the Exchequer George Osborne: "If the people choose to leave the EU in the June referendum, the price drop in London may fall by 18%, and the overall UK economy will also be hit hard."

More hawkish central bank

The Bank of England said on February 9 that the central bank is expected to raise interest rates faster than expected last year, given the acceleration of global economic growth. This statement has the potential to reinforce the central bank’s expectation of raising interest rates again in a few months. At the same time, this year's UK economic growth forecast was raised from 1.5% predicted in November last year to 1.7%. This expected increase is mainly reflected in the general trend of global economic recovery.

In a letter to the British Chancellor of the Exchequer Philip Hammond explaining the decision of the central bank, Bank of England Governor Mark Carney said that if the future economic situation is generally in line with expectations, it may be necessary to tighten monetary policy earlier, and the tightening is necessary.

And this will definitely add to the future of British real estate.

Source: Wall Street

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