The latest Nationwide Building Society UK House Price Index shows what they are describing as an “unexpected pickup in annual price growth in January”, and a record high of privately rented homes.
UK Annual house price growth accelerated to 3.2% at the start of 2018, compared to 2.6% at the end of 2017. Rather than being an indicator of increasing sales and increasing household confidence, Robert Gardiner, Nationwide’s Chief Economist, said: “The flow of properties coming onto estate agents’ books has been more of trickle than a torrent for some time now and the lack of supply is likely to be the key factor providing support to house price.”
“How the housing market performs in the year ahead will be determined in large part by developments in the wider economy. Brexit developments will remain important, though these remain hard to foresee.
“We continue to expect the UK economy to grow at modest pace, with annual growth of 1% to 1.5% in 2018 and 2019. Subdued economic activity and the ongoing squeeze on household budgets is likely to exert a modest drag on housing market activity and house price growth.”
Good news for expat landlords in the UK?
Private rentals in the UK are up too, with the number of privately rented households reaching a record high of 4.7 million, an increase of around 75% over the past decade. In England, 20% of households are now privately rented, up from 13% in 2007. The fall in home ownership has been the most pronounced among those aged 35-44. Over the past 10 years, within the 35-44 age group, the number of households renting has increased by 126%.
In 2016-17, the private rented sector accounted for 4.7 million or 20% of households in the UK. In London, private renting was the most prevalent type of household living (30%), followed by outright ownership (25%). A smaller proportion of households were buying with a mortgage (22%) or renting in the social sector (22%). Outside of London, outright ownership predominated (36%), followed by buying with a mortgage (30%), and renting in the private (19%) and social (16%) sectors.
No one knows yet what effect Brexit will have on rental figures. The English Housing Survey from the Ministry of Housing, Communities & Local Government does not include a breakdown of the nationalities who are the most prevalent renters in England, therefore it’s impossible to gauge if the number of EU renters will
greatly affect rental property supply, availability and rental cost in the post-Brexit era.
An expat property owner told me last week that the uncertainty of Brexit plus the impact of buy-to-let (BTL) changes in the UK, including lower tax deductibility of rental income, is forcing him to take a longer term view of the stability and profitability of the rental market in the UK. Are you an expat landlord with property in the UK? Do you feel the same?
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