Burst of activity in the UK property market was a temporary phenomenon
Sales of property in the UK have fallen by the end of April. This was the first drop since September 2011. Experts say that the surge of activity in recent months was a temporary phenomenon. Customers wanted to get home before the removal of tax exemptions. Today, the British property market returns to a state of depression.
London remains the only UK region where real estate becomes more expensive under the influence of growing demand and shortage of houses. The cost of housing in London is held close to maximum levels in the history of several months. Upcoming Olympic Games help to increase demand for housing in prime locations of the British capital.
The aggravation of the crisis in the euro area is one of the reasons for the decline of real estate sales in the UK in April. Investors expect to reduce the cost of homes in all UK regions, so refrain from immediate purchases.
According to the Bank of England, the UK commercial banks sharply reduced mortgage loans to individuals in February and March of this year. Information about mortgage lending in April is not yet published, but experts predict a continued decline of financing housing purchases.
Despite the decrease in the number of loans, the cost of mortgages in the UK continues to grow. Commercial banks tend to protect themselves from the crisis, increasing resource costs for borrowers. This has a negative effect on existing homeowners, who served with the adjustable rate mortgage. Some borrowers may lose their housing because of failure to pay on the loan, as the labor market situation in the UK remains unfavorable.
Elimination of tax breaks for first home buyers, as well as an increase in taxes for the buyers of expensive homes also have a negative impact on the UK property market. Investors are not rushing to buy an asset that will cost less than a year. Especially since they will not buy the asset after the tax increase.