House price growth picked up speed in the month leading up to, and including Britain’s vote to leave Europe, but the outcome of the divisive poll could lead to “longer term negative sentiment” for the UK’s property sector, according to ratings agency Fitch.
Uncertainty over the timing and terms of Britain’s exit from Europe will “weigh on confidence” both for buying and letting property, Fitch said.
Fitch has published its latest research on the UK property market after official figures showed house prices grew 8.7 per cent in the year to June, up from 8.5 per cent growth in May, although the Office for National Statistics noted the data predominantly covered the period prior to the Brexit vote.
Fitch notes that the property market is not facing the same dire circumstances as after the financial crisis in 2008-09, when it was difficult to secure bank lending. It writes:
UK property values are highly cyclical, with UK residential properties historically having long periods of value growth, followed by shorter corrections. Big reversions in house prices in the UK have generally occurred after major economic events or interventions. The current market situation, however, is different from that during the global financial crisis due to the strong availability of liquidity.
Some estate agents have painted a pessimistic picture of the remainder of the year as buyers and sellers hold back until they understand the full consequences of the Brexit vote. But survey data have been mixed.
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