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Global weathervane! British housing prices fell for the first time in six years

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

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

The prediction of George Osborne, the then Minister of Finance, was gradually honored. Brexit would cause a sharp shock to the decline in British house prices.

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

What made homeowners even more tormented was that since the rate hike in November last year, the Bank of England said last week that if the British economy maintains its current operating trend, the rate of increase of the Bank of England’s benchmark interest rate may accelerate. This may also exert further pressure on the property market.

According to Bloomberg News reported on February 8, Simon Rubinsohn, chief economist of RICS (The Royal Institution of Chartered Surveyors), said: "Our latest internal analysis shows that housing transactions will remain very sluggish in the coming months. The record shows that insufficient supply remains the most critical challenge."

For the first time in six years

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

However, since then, the overall growth rate of British housing prices has been in a downward trend. In addition to the slight rebound from February to May of 17 years, house prices have been on an accelerated downward trend since May. This must be reminiscent of the continuing impact of Brexit in June.

Former Finance Minister's Prophecy

According to a report by Reuters in February 17th, EU migrants working in the UK in the fourth quarter of the 16th had their largest drop in 20 years, indicating that the Brexit and the pound fell have weakened Britain's attractiveness. The UK’s economy is heavily dependent on foreign labor. The Brexit incident has resulted in a large number of migrants from the EU. This undoubtedly reduces the demand for home purchases in the UK, and London, the largest immigration city, bears the brunt of it.

The BBC reported as early as 2016 the British Chancellor of the Exchequer George Osborne’s warning: “If the people choose to leave the European Union during the June referendum, London house prices may fall by 18%, and the overall UK economy will also be severely hit.”

More hawkish Bank of England

The Bank of England stated on February 9 that due to the acceleration of global economic growth, the central bank is expected to raise interest rates faster than expected last year. This statement may strengthen the central bank’s expectations of raising interest rates again within a few months. At the same time, this year's economic growth in the UK is expected to increase from 1.5% in November last year to 1.7%, which is expected to reflect the general trend of global economic recovery.

Bank of England Governor Mark Carney explained to the British Chancellor of the Exchequer Philip Hammond that the decision of the central bank stated that if the economic situation in the future is generally in line with expectations, it may be necessary to tighten monetary policy earlier and the tightening rate must be greater.

This will undoubtedly worsen the future of British real estate.

Source: Wall Street News

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