Asking prices have fallen in four English regions, London and Scotland with the UK’s decision to leave the European Union being blamed for the change to a 19 month long rise in values.
Overall mix-adjusted average asking price dropped 0.2% since June as confidence among sellers was dampened by the outcome of the referendum vote, according to the latest asking price index from Home.co.uk.
London prices, which were already looking the most overvalued, have been hit the hardest, falling 1.1% in just one month which equates to around £6,000 less for the average home in the city.
The index also shows that the average asking price in the South East has slipped 0.2% during the last month, but the biggest drop outside London was in the North East with a fall of 0.7%. The index report suggests that this fall comes as a serious blow to a region that was just showing the first signs of genuine recovery since the financial crisis of 2007.
However, several English regions and Wales are still seeing asking prices rise. The East Midlands rose the most with growth of 0.7% over the last month, followed by the North West and ales both up 0.4%, Yorkshire up 0.3%, the West Midlands up 0.2% and the East of England up 0.1%.
‘As the Brexit vote is only about two weeks old, we may well see these figures turn negative next month. Whilst the key drivers of lack of supply and cheap credit remain, uncertainty brought about by the Brexit vote is undermining the property market,’ said Doug Shephard director of Home.co.uk.
‘Overall, the current mix-adjusted average asking price for England and Wales is now 6.1% higher than it was in July 2015, and we predict this figure will tend towards 0% over the coming months,’ he added.
He expects that both consumer and investment decisions are set to be delayed until there is somewhat less uncertainty about future prospects for the UK economy but uncertainty looks set to remain for some time and when it comes to house prices the fallout from Brexit looks set to cut short the price rallies of several regions including preventing a recovery in the North and making the inevitable correction for London and the South East deeper and more painful.
The index report also shows that the supply of property has increased in London by 6%, the East of England by 7% and the South East by 4% while the typical time on the market has increased by two days to 82 days over the last month across England and Wales but is still six days less than in July 2015. The total stock of property on the market is also up again but is still 5.2% less than in July last year.
‘In the light of the referendum result, we revise our prediction of 10% growth per annum for these regions down to 2%. The South West also looked set to become one of the next regional hotspots, however, Brexit and a falling London market will hamper this region’s growth as retirees find it more difficult to sell in the capital and transfer their equity to the region,’ said Shephard.
‘There has been a discernible shift in regional supply dynamics. The number of properties entering the market has increased significantly in Scotland, London and the Home Counties. This data serves to suggest that the property booms in these regions are either over or coming to a close,’ he explained.
‘In the other regions, supply shortages are lessening. This is likely to curtail further price rises as demand, as indicated by an inverse correlation with typical time on the market, is falling in all regions with the exception of, for the time being, Yorkshire and Wales,’ he added.
