Double whammy: Brexit and an election weigh on UK housing market

Property listings saw biggest annual fall since 2009 as Prime Minister Boris Johnson promises to end economic paralysis.

Uncertainty and confusion around Brexit have 'paralysed' the British economy, British Prime Minister Boris Johnson is expected to say in a speech as his Conservative party faces an election in December after delaying a Brexit deal [Tolga Akmen/AFP]
Uncertainty and confusion around Brexit have 'paralysed' the British economy, British Prime Minister Boris Johnson is expected to say in a speech as his Conservative party faces an election in December after delaying a Brexit deal [Tolga Akmen/AFP]

The number of properties put up for sale in the United Kingdom has fallen by the most in any month in more than 10 years as the combination of Brexit and an upcoming election weighs on the market, a survey showed on Monday.

There were 14.9 percent fewer properties put on sale in the four weeks to November 9 than in the same period last year, property website Rightmove said.

That was the biggest annual fall since August 2009, shortly after the global financial crisis.

“I’ve seen lots of unusual events affecting the property market in my 40-year career, but a Brexit deadline followed by a snap general election six weeks later is obviously a new combination,” Miles Shipside, Rightmove director, said.

Prime Minister Boris Johnson called a December 12 election in a bid to break a deadlock in Parliament over his plan for taking Britain out of the European Union, the deadline for which has been delayed until January 31 from October 31.

Johnson is expected to say in a speech that the Conservative party would deliver Brexit and end the uncertainty and confusion that has “paralysed” the economy if they are re-elected next month on Monday, according to extracts released in advance.

Speaking at an annual conference of British business leaders, Johnson will say that while big businesses made clear they were not in favour of Brexit in 2016, they were also now clear they wanted certainty.

“With a Conservative majority government you can be sure we will ‘Get Brexit Done’ and leave with the new deal that is already agreed – ending the uncertainty and confusion that has paralysed our economy,” Johnson will say.

Rightmove said some would-be property sellers might be waiting to see if Britain’s next government reforms the stamp duty tax on property transactions which might reduce the cost of buying a new home.

The average price of property coming to market rose by an annual 0.3 percent, in line with other measures showing house prices almost flat-lining, and the number of sales agreed was down by 2.9 percent, Rightmove said.

In London, values fell by 0.8 percent from a year ago, with new listings down 27 percent. The survey showed that losses in London’s outer areas outweighed some signs of stabilisation in the centre.

“Would-be sellers are not only faced with prices well below the peak of the boom, but also the usual prospect of lower asking prices in the run-up to Christmas,” the report said. “On top of that they now have to factor in the unique autumn combination of a Brexit deadline and a looming general election.”

In another survey, property developers said they were even more pessimistic about the UK leasing market than they were six months ago.

Forty percent of them indicated that the leasing market was a ‘little worse’ in the third quarter, up from 27 percent in the first quarter, according to the London Office Crane Survey by Deloitte Real Estate .

British construction activity shrank for the sixth month in a row in October, and at one of the fastest rates since the 2009 financial crisis, as Brexit worries and a general economic slowdown held back growth.

Office construction in central London slowed, sliding 10 percent from six months ago to a five-year low of 11.9 million square feet (1.1 million square metres), the Deloitte survey showed on Monday.

The survey also suggested that construction of new offices in the last six months is down by nearly a half, from 3.5 million square feet (325,161 square metres) to 1.8 million square feet (167,225 square metres) in the previous survey.

London continued to dominate construction activity with technology, media, communications and financial sectors taking the most space.

“Today’s survey follows a three-year high of new construction starts, so these figures indicate a rebalancing of office development, rather than a worrying decline,” said Mike Cracknell, director at Deloitte Real Estate.

Cracknell said that 49 percent of space under construction had already been occupied due to the scarcity of “ready to occupy” space.

The Deloitte report said developers are taking on large-scale construction projects on the condition that these spaces are pre-let.

“Developer and investor sentiment for speculative building is definitely softening as pre-letting is fast becoming the prerequisite for starting construction,” Cracknell said.

Source: News Agencies

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