According to Investec Private Banking, the political chaos of Brexit has taken away the focus from the fact that the UK’s economy is actually growing, and once it has concluded the UK is likely to outperform most large global economies.
Considering the size and impact the property industry has on the overall economy, there has naturally been an increased amount of uncertainty and speculation with investors. However, there seems to be no sign of any property crash, with most prices stabilizing in London and continuing to increase in various other regions across the UK.
A major factor to why the UK property market continues to be stable, even through economic and political turbulence, is due to the remaining supply and demand issue. Peter izard of Investec Private Banking states that “We are an island, we have a growing population, we have an ageing population.” He added: “We don’t have enough of the raw materials and the necessary skills in enough quantity – we have a shortage of bricklayers – to keep up with housing demand.”
Robert Gardner, Nationwide’s chief economist, said the fact that annual house price growth has stayed within a “fairly narrow range” of 2-3 per cent over the past year suggested there was “little change in the balance between demand and supply in the market over that period”.
Craig McKinlay, sales and marketing director at Kensington Mortgages, said the trend highlighted by the Nationwide data was “all too familiar. An insufficient supply of new housing is continuing to make prices creep up year-on-year.”
It is clear that supply issues are overriding the inevitable effect of Brexit, resulting in strong capital growth throughout most areas of the UK. This effect is particularly blatant in specific larger cities across the North West and West Midlands, where supply issues, alongside a huge growth in infrastructure spending and job creation has resulted in growth rates of up to 10% in the past 12 months.