WHY LONDON’S HOUSE PRICES ARE FALLING

London’s house prices are currently going through hard times. However, this issue is something that has been occurring in recent years. London has been having issues with house pricing since a couple of decades ago, since then prices have been bubbly. During the 1990’s the price of an average house was tripled. This growth in prices shows pretty much what has been going on in Britain. Until the most recent year in 2014, when house prices were going up by 20%.

But, what has made these prices fall? Clearly, one of the most affecting impacts of the Brexit has been this one, the fail of house prices. In 2014, the government made changes to stamp duty, a tax on homebuyers, raising it for those buying houses worth more than about 1,000,000 dlls. Recently stamp duty became heavier still for those purchasing second homes. London is stuffed with luxury pads, and the city has over half the houses sold in Britain that cost more than 1,000,000 dlls.

Now prices are less bubbly than they were a few years ago. One explanation is the significant increase in supply. London’s rate of house-building has had a significant growth. Last year the stock of housing grew faster in London than nowhere else in Britain. Extra supply or the surplus in houses s has put some pressure on house prices, which made them go down. Changes in financial regulations have also had a significant effect such as New rules to intensify Britain’s financial stability, have discouraged banks from giving many loans. Since then the number of mortgages granted to first-time buyers in London has decreased about a 10% but rising in some other places in Brittan.

The growth in property prices may have slowed in London. Some estimates suggest that the rate of the building might decrease. However, housebuilders are worried about Britain’s economic prospects. And even if prices go are steady like now for years, London will still be an extremely expensive market.

https://www.economist.com/blogs/economist-explains/2017/11/economist-explains-6