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London house prices have recovered most from recession

House prices in London have recovered the most from the global financial crisis, London lettings and estate agent Benham and Reeves has revealed.

Despite the Brexit slowdown, typical prices in the City of London are 89% higher than the pre-crisis peak of August 2007, rising from £474,000 to £898,000 in September 2019.

Marc von Grundherr, director of Benham and Reeves, said: “Despite the recent negative headlines about the London housing market, the capital has made the strongest recovery from the global financial crisis and continues to do so despite wider market uncertainty.

“This recovery also seems to extend to other parts of the South East of England and while these more inflated areas may have seen a drop in the rate of price growth of late, they remain the most durable on a long-term basis.

“Proof, if it was ever needed, that the UK property market is far tougher than many give it credit for and any momentary blip caused by the current landscape will leave no lasting damage.”

Other areas in the capital where the cost of property has increased are Hackney (88%), Waltham Forest (83%) and Lewisham (83%).

Outside of London, house prices in Cambridge increased the most between August 2007 and September 2019, rising from £275,000 to £456,000.

For the UK as a whole, prices have risen by 23% over the period.

By Michael Lloyd

Source: Mortgage Introducer

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No-deal ‘risks year-long recession, tumbling pound and house price crash’

Britain would enter a year-long recession on a par with the early 1990s, the pound would crash by 10%, and house prices would tumble, according to the latest grim look at the economic toll of a no-deal Brexit.

The UK’s fiscal watchdog warned that Britons would face surging price inflation following a plunge in the value of the pound, but said the Bank of England was likely to slash interest rates from 0.75% to just 0.2% by the end of 2020 to help offset the economic woes.

In its Fiscal Risks Report, the Office for Budget Responsibility (OBR) said that, if the UK crashed out of the EU without a deal on October 31, the UK would be tipped into a “full-blown” recession by the end of the year.

£30bn Amount added to public borrowing each year under a no-deal Brexit
OBR Fiscal Risks Report
But experts said the OBR’s assessment is a far cry from the Bank of England’s doomsday report published late last year and the OBR itself admitted it was “by no means a worst-case scenario”.

The OBR – headed by chairman Robert Chote – said gross domestic product (GDP) could drop by 2.1% over the next year, driven lower as companies cut their investment amid higher trade costs and the wider economic woes.

Consumer spending would also fall as wages are squeezed by the Brexit-hit pound and higher trade tariffs, compounded by under-pressure wage growth, while unemployment would also initially increase – peaking at just over 5% in 2021.

All this would knock the housing market, with prices likely to plummet by nearly 10% between the start of 2019 and mid-2021.

The economy would start to pick up again in mid-2021, according to the OBR.

Its scenario analysis also looks at the impact on the public finances, warning that a cliff-edge Brexit would add around £30 billion a year to borrowing from 2020-21 onwards and around 12% to national debt as a share of GDP by 2023-24.

The OBR added that. while the plummeting pound will give a fillip to exports, this will be largely offset by the immediate hike in trade tariffs.

While the report makes for painful reading, the OBR said its stress tests are not as catastrophic as the Bank’s controversial no-deal Brexit report last November, which predicted an 8% contraction in the economy, a 25% crash in the pound and a 30% dive in house prices.

It has instead based its analysis on the International Monetary Fund’s outcome scenario.

It said: “A more disruptive or disorderly scenario, closer to the stress test we considered two years ago, could hit the public finances much harder.”

It comes as the Treasury Select Committee separately on Thursday said it has asked the Bank and the Treasury to provide updated scenario analysis of a no-deal Brexit ahead of Parliamentary votes before the October deadline.

Dr Ivan Petrella, associate professor of economics at Warwick Business School, said the OBR gives a “much more optimistic assessment of the potential dangers of a no-deal Brexit than the Bank of England, the Treasury and most commentators are currently predicting”.

He added: “I think the short-term impact projected by the OBR is a much more likely outcome than the severe recession predicted by the Bank of England.”

But he warned that a “rushed no-deal exit is likely to have a more prolonged negative impact on the economy”.

Source: Shropshire Star