How the property market of England performed in the last five years and what factors affected it?
RICS or The Royal Institution of Chartered Surveyors issues the most comprehensive and downbeat assessment report.
It takes into consideration each factor that influences the market; internally or externally.
The report says that the property prices have been flat nationwide, and there was a consecutive decline in the new instructions from sellers; month after month.
Similarly, the demand from buyers also showed a drop consecutively for 12 months in a row. It has never observed earlier.
RICS uses a peculiar mechanism to measure confidence in the property market. It balances the surveyors who see the price rise against those who see price fall.
The ratio has been falling since 2013 which means the level of confidence is going consistently low.
Though parts of the country showed movement, the nationwide price balance unmoved
Interestingly, the South-East England and London are the property market where the downfall is the deepest. The Northern England and Midlands showed a rise in the price.
However, at the national level, the price balance has not moved at all from 2013 levels.
As far as London is concerned, almost half of the respondents cited a decline in the price.
In East Anglia, North-East and South-East also there was a decline reported, but not up to the extent of London.
The other parts of the UK, East Midlands, Wales, and Northern Ireland the prices showed an upward thrust.
Most of the respondents blamed Stamp Duty and Brexit for the price drop
What factor killed the momentum of the property prices in the country?
Well, if we consider the factors mentioned in the RICS report, then two elements killed the fluidity:
- Stamp Duty
As per experts, the things will turn for the better only when the extent of the economic damage will be understood and appropriately analyzed. It is assumed that even the Bank of England will also postpone the increase in the interest rates considering the drop.
The indications given by the RICS report are not quite encouraging. It doesn’t see any possibility of the situation reverting very soon. The indications are pessimistic and terrible indeed.
Even the rental market is also getting the hit
On the other hand, it has the potential to impact the wider economic parameters adversely.
For example, rents will increase due to the introduction of higher taxes on buy-to-let. Thus, the tenant demand will also drop in several parts of the country.
When more properties are available for rent, and there will be no increase in the tenant demand; rent values will drop eventually. It is feared that the trend has already been started and continue to become worse.
Whatever might be the reasons behind the situation, but it is not good for the economy.
When a crucial sector of the real-estate market is led badly, it is quite detrimental for both tenants and landlords. What is the use of the demand being all-time high?