History says that the repercussions of war on the real estate market are different in different time frames. Areas near the warzone face decrease in housing prices, and areas far from the warzone experience higher housing prices in the short term.
The war causes damage to land and property, thus the areas near the warzone face scarcity of real estate; thus, the real estate market grows long-term.
The Real Estate Market Prior To Ukraine-Russia Conflict
The real estate sector in the UK is reporting its highest gains in recent years. Large real estate builders like Persimmon have reported 1 billion pounds in profit during the 2021 fiscal year. This is because of favorable market conditions for the housing sector to grow.
Another London-based housebuilder recently posted their profits then tripled to 320 million pounds during the year. Another factor that traces the attention of real estate investment is the prices that are increasing at a rapid pace. With the consumer price index reaching its 30-year high, housing prices are in bullish momentum.
Nationwide, UK’s largest housing society reported that their house sales on mortgage increased by 12.6% during the year to February. All the real estate builders expect a sharp rise in their sales in 2022. Persimmon expects its sales to increase by 4-7% in 2022.
Effect of War on Real Estate Market
During the war, people like to hold their liquid assets to use them for their necessities. Houses are necessities, but the attraction to the real estate market that is constant sales purchase and investment-driven dealing reduces.
The effect of the Ukraine war might be different for different real estate markets. As the battleground is near Europe, the expected outcome is greater in Europe than in the US real estate market.
According to the National Association of REALTORS (NAR), the US real estate market will not be affected by the Ukraine war. However, different economists believe that the real estate market will show less volatility, especially the American real estate market.
Countries near the active war zone might take some heat, but the aggregate effect will be silent.
W.S London Management is closely observing all the dynamics of changing outlook and geopolitical developments that may affect the real estate market in the UK. Walter Soriano London Management is committed to providing real estate consultancy that yields better decision-making for you.