House prices in the UK to go higher, despite Brexit

By BLOOMBERG

LONDON • London’s decade-long housing boom may have been cooled by Brexit, but the property market in the rest of the UK is largely shrugging it off.

While home prices in the capital have risen only 1.7% since the June 2016 vote, those in Birmingham, Britain’s second-biggest city, have jumped almost 15%, according to Hometrack. Manchester is close behind with a rise of 14%. The only city where values have fallen over the past 2½ years is Aberdeen.

“Households in regional cities are still taking advantage of low mortgage rates and rising employment to bid up the cost of housing, shrugging off uncertainty around the economic outlook,” said Richard Donnell, director of research and insight at Hometrack.

“The discounts from asking prices in the regions continue to narrow, suggesting further upward pressure on values in the near future.”

The regions don’t have to contend with issues of affordability and stamp-duty increases to the same extent as London, where a slowdown that was already underway has been compounded by the uncertainty surrounding Britain’s future relationship with the European Union.

Home prices in the capital have surged 84% since 2009, galloping ahead of wages and meaning that the average Londoner now needs 14.5 times their annual income to buy a home. Rental values are almost 75% higher than the UK average.

Those factors, combined with more stringent lending criteria and economic and political uncertainty, have caused London home sales to fall by almost a fifth since 2014.