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Average property in Britain now worth £214,000, with “the underlying lack of supply” likely to push prices further in the long-term post Brexit.
- British property prices rose by 8.7% on the year in June
- While growth may slow following the vote for Brexit, the lack of housing supply is likely to ensure growth continues in the long-term
- High numbers of overseas investors have looked to add more UK property to their portfolios during the new currency window of opportunity created by Brexit
Property prices in the UK grew further prior to EU referendum – and experts believe a demand to supply imbalance means that the long-term appreciation projections remain strong following a vote for Brexit.
Average values rose by 8.7% in the year to June, up from 8.5% in the year to May according to the latest house price index published by the Office of National Statistics (ONS). The average national price now stands at £214,000, representing growth of £17,000 year-on-year.
The data, however, only captures one week of activity following the result of the EU referendum.
Richard Snook, a senior economist at PricewaterhouseCoopers (PwC), believes that the vote for Brexit will naturally slow the rate of growth “to around 3% this year and around 1% in 2017”.
However, Brexit has not altered the key supply and demand fundamentals that have contributed to years of strong price growth in the UK. According to Andrew McPhillips, Chief Economist at Yorkshire Building Society, a shortage of property is likely to still ensure long-term growth for investors. He also alluded to the pressure the private rented sector (PRS) may come under if price growth still makes owning unaffordable for many Britons.
McPhillips said: “Although we are likely to see fluctuations in demand in the short term due to uncertainty following the result of the EU referendum, the underlying lack of supply will remain as a constraint on market activity and is likely to push up house prices in the long term. This will make house prices unaffordable for an increasing number of people unless the country builds more homes to meet demand.”
The fall in the value of the pound post-Brexit has created a window of opportunity for investors dealing in dollar-pegged currencies. Many of the UK’s largest property agents have reported a surge in interest from buyers in Asia and Middle East, underlining the continued confidence the global investor community still has in the UK property market.