Jan. 28 (NBD) - With Brexit set for March 29, it remains unclear whether British lawmakers will approve the divorce agreement that Prime Minister Theresa May's Conservative government has negotiated with the EU. Amid such uncertainty, housing market in the UK cooled down with key activity indicators continuing to slip to the headline level.
According to a report from the UK's Office for National Statistics (ONS), the average house prices in the country fell 0.1 percent to 230,630 pounds (182,437.1 U.S dollars) in the year to November 2018. The lowest annual growth was in London, where prices fell by 0.7 percent year over year, unchanged from October 2018.
Simon Rubinsohn, chief economist of Royal Institution of Chartered Surveyors (RICS) commented that it is not surprise as the near term pessimism in the property market may be heavily linked to the lack of clarity around what form of departure the UK will take from the EU in March.
However, while the majority decides to wait and see, Chinese investors show growing interests in the housing market in the UK in recent years.
Wei Chaohe, partner of the China region business of London-based property company Berkshire Hathaway HomeServices Kay & Co, revealed on the back of subdued trend, it is now a buyer's market. Some people think the uncertainties may persist and choose to enter the market. "For example, one of my clients has bought a commercial property and plans to turn it into 50 apartments. I've taken a dozen of such cases and all are backed by Chinese investors," Wei said.
"The housing prices in the UK has been dampened to some degree after the referendum, especially the price of property located in the urban area of London. But it has been more than two years and we think it is the bottom now," said Wei. Brittan has long been a country facing heaving housing shortfall, he explained.
Statistics provided by Juwai.com, an online portal for Chinese to find international properties, also evidenced the trend. It told news outlet the 21st Century Business Herald that the number of Chinese investors who enquired prices of properties in London surged from the third quarter of 2016 to the second quarter of 2017. After a little break, the number restarted to increase starting from the second half of 2018.
Actually, Chinese buyers are optimistic about London's economy and the property market in the long run. They see it as a good city to work, live and get educated, said Luo Xuexin, CEO of Juwai.com, to the 21st Century Business Herald.
Besides, other British cities like Manchester, Birmingham and Liverpool are also attractive to Chinese investors with economic strength and bright outlook.
"I bought a house in Manchester because the UK government promised to boost the development of northern cities and it is transforming from an old industrial city to a new media city," said a Chinese investor. Moreover, it only takes a little over an hour from Manchester to London, added the person.
Although the overall performance of the UK's property sector is not good, housing prices in some regions keep climbing.
The latest data on UK house prices released by ONS has revealed that house prices in Wales and North Ireland increased 5.5 percent and 5 percent year on year, respectively, in November of 2018 and house prices in West and East Midlands, South West and North East all increased over 4 percent during the same period.
With regard to the outlook of UK's housing market in 2019, RICS noted while downward momentum in prices at the national level is expected to persist over the near term, the twelve month outlook remains broadly flat. In addition, the year-ahead sales expectation actually is turning positive for the first time since May.