The UK housing market is at the weakest point since the global financial crisis a decade ago as Brexit uncertainty puts off buyers, according to a property company.
Savills, which sells and manages commercial and upmarket residential property around the world, said it had sold fewer houses in the UK in the first half of 2019 than at any point since the first half of 2009.
The declines have been led by London, where prices have fallen after years of rapid inflation. The average price of London homes sold by Savills fell by 32%, to £2.1m, in the first half of 2019 compared with the previous year, as the company shifted towards less expensive homes to make up for a weakness in “prime properties” – those worth more than £1.5m. Volumes of more expensive prime homes in central London fell by 13%. Outside the capital average prices edged up.
Weakness in the UK was mirrored in international markets amid “political instability and slowing global economic growth”, Savills said. In Hong Kong, which has faced weeks of political protests, office investment volumes fell by 34% year-on-year in the period, while the broader Asia-Pacific region remains under the shadow of the trade war between the US and China.
Mark Ridley, the chief executive of Savills, said: “In many markets, particularly the UK and Hong Kong, political and economic uncertainty has considerably reduced the volume of real estate trading activity in recent months, although occupier demand remains robust.
“Underlying demand for the secure income qualities of real estate remains high, but these macro uncertainties weigh on investor sentiment and make predictions in respect of near-term market activity difficult to determine with accuracy.”
The company’s total revenues grew 16% year-on-year in the first half to £847m, in part because of growth in non-transactional operations such as facilities management and consultancy.
In the UK, both residential and commercial property sales volumes have been reduced by Brexit uncertainty since June 2016. The uncertainty continued in the first half of the year after the government in March delayed the scheduled date of Brexit until 31 October, dampening the prospects for a short-term increase in demand for property.
The British commercial market, including office space and warehousing, also declined by 7% year-on-year in the first half, “reflecting continued Brexit-related uncertainty”, Savills said.