A report by Rightmove, the property website, has shown a month on month fall in house prices of 0.4% for June 2017 compared to the previous month. This is the first time since December that we have seen a month on month fall in the UK property market and would seem to indicate uncertainty and concern. However, the figures are very much skewed towards London and the South of England and you might be surprised at the breakdown.
Weighted figures
It was only the West Midlands, down 0.8%, Greater London down 2.4% and the South East down 0.9% which registered falls between May and June. If we tell you that the North East of England saw prices increased by 0.7%, the North West by 2.6%, York and Humber by 1.7%, East Midlands by 1.3%, East of England by 0.6%, Wales by 3.7% and the South West by 1.2%. This might start give you an idea of how weighted towards London and the South East housing data tends to be.
It is obvious that the Greater London market is very prominent within the UK property market and a fall of 2.4% contributed heavily to the overall month on month fall for the UK as a whole of 0.4%. However, what kind of weighting should London have on UK property market data?
Not as bad as some would have you believe
In the doom and gloom of Brexit and other political shenanigans it is welcoming to know that the UK still posted annual house price growth of 1.8% year on year to June 2017. While it has to be said this is the lowest rate since April 2013 a lot has happened in the political arena since then. It is difficult to understand whether investors are selling property in London and the South of England, and reinvesting in other parts of the country, or maybe new buyers are emerging with a long-term view in mind.
It would be foolish to suggest that the UK property market is in anyway set to grow in the short to medium term. The truth is that nobody knows how the Brexit negotiations will develop and ultimately conclude. They began today with “optimism” but only a few weeks ago Theresa May called a snap general election with the idea of increasing her majority in the House of Commons rather than losing it. So, those who suggest that Brexit negotiations will be smooth and fairly quickly concluded will have to think again!
Look at the fundamentals
There is no doubt that the UK property market is heavily dependent on the UK economy over which the dark cloud of Brexit looms large. However, we still forget that the UK has one of the largest economies in the world, the European Union is significant but not the largest market in the world and the UK is now free to agree trade deals with other countries around the globe. It may be a little rocky for the UK economy in the short to medium term but there is hope for the future despite the snippets and snipes thrown the way of the UK by their EU counterparts.