House price growth in London has accelerated for the first time in nearly a year, according to an official index, however the UK election result will create more uncertainty for the London property market, affecting values and sales volumes
London property values increased by 4.7% in the 12 months to April, taking the average price to £482,779, data released jointly by the Office for National Statistics (ONS), the Land Registry and other bodies. The annual growth rate was 1.5 percentage points higher than in the year to March 2017.
Across Britain, a first-time buyer faces paying 5% more for a home than a year ago, with the average price paid by the sector now at £185,266. Commenting on the figures, Richard Snook, a senior economist at PwC, said: “These figures go against the recent trend of a Brexit-related slowdown that we predicted last year but remain consistent with our guidance of 2% to 5% growth in 2017 as a whole.”
London homebuilders that develop high-end homes dropped after the hung parliament. Crest Nicholson Holdings Plc fell 6.7 percent, the most in 11 months, and was down 5 percent at 580 pence at 1:16 p.m., making it the biggest faller in the FTSE 350 Index. Berkeley Group Holdings Plc, the U.K. capital’s biggest homebuilder, was down 3.4 percent.
Ex-Housing Minister Gavin Barwell lost his seat as Prime Minister Theresa May’s gamble on calling a snap election backfired. The Labour Party won support after it called for more affordable homebuilding by local government after property values and rents soared, and said it would suspend the right of tenants to buy discounted properties from the councils.
Adam Challis, head of residential research at broker Jones Lang LaSalle said “a coalition government provides the economy with less stability. The short-term impacts are uncertain and this could drag on housing market activity if clear political leadership does not emerge quickly.”
Philip Woolner, Joint Managing Partner at Cheffins, warned: “The fact that the UK is about to enter a situation with a hung parliament is bound to have ramifications for the property market.
He claimed that Labour and Conservative policies on housing could both benefit the market, but a hung parliament situation may mean they can’t deliver – causing more issues for those struggling to get on the property ladder.
Greg Hill, deputy Chief Exec at Hill, agrees. “No business likes uncertainty and housebuilders like it least of all. This hung parliament and the horse-trading that will take place over housing policy to get a coalition in place means that many housebuilders will hit the pause button on their investment decisions,” Hill says.
“This is the exact wrong moment for a construction slow down. The country needs new homes desperately. We hope that the negotiations are concluded rapidly so that the new government is in place and ready to work with the sector to go out and get building.
“We will not be able to deliver 1m or more homes by 2022 if we don’t have a sufficient volume of skilled builders to construct them.”
DMZ thinks that the cash rich investors from foreign shores will now dominate the luxury home market as sterling falls. We see house growth will not going above 2% in the next two years even though values will rise by 15% by 2021. The housing market thrives on certainty, This means the current hung parliament caused by the General Election 2017 results could cause negative ramifications for the country’s housing market, if it’s not quickly resolved.
Matthew Turner, Chief Executive of Astute Property Search, predicts the UK will continue to woo foreign property investors if the pound slumps further. “The British pound will weaken, providing international purchasers with the further opportunity to purchase with a favourable exchange rate,” he says. “However, uncertainty will cause prospective buyers to stay out of the market, leading to fewer transactions going forward. The next few days will see negotiations which will decide whether we enter into a coalition or a minority Labour government and with Brexit on the horizon, the uncertainty is set to continue for the foreseeable future.”