BBC News reports that activity in the UK housing market has “settled down” after a Brexit surprise, citing RICS, with sales and prices expected to rise in the coming months.
Source: UK housing market settles down post-Brexit, says Rics – BBC News
Yesterday we saw Nobel economist Paul Krugman write in the NYT that short-term Brexit fears had been overplayed and not supported by sound economics.
However, Krugman stressed that the long-term post Brexit outlook for the UK was a 2-3% annual reduction in national output in perpetuity. This is equivalent to a massive reduction in national wealth and house prices will be impacted.
Dr Alf brings us an interesting piece but a 2% to 3% annual drop in perpetuity of UK output seems excessive given that Paul Krugman’s gloom and doom predictions of 3 months ago have proved to be wildly inaccurate.
As more jobs are automated the UK productivity problem will be gradually solved but at the expense of demand unless all those displaced can be made into self employed entrepreneurs capable of selling to markets all over the world through websites.
We have a national housing shortage of 12 million houses growing by 500,000 houses each year which factors in immigration from all sources at 600,000 a year minus a build rate of 100,000 houses a year. Even if the immigration figure is halved and we have 300,000 deaths a year we are still left with a finite amount of land(the UK is 1/99th the size of America) ,so for house prices to fall the build rate has to dramatically increase,something which is not in prospect unless we adopt German style systems building,increase the release of available building land and increase housing finance equally dramatically.