How Brexit Uncertainty Has Affected the UK Housing Market
Although the respective ideologies of Brexiteers and Remainers couldn’t be further apart, they surely agree that the inconclusive uncertainty of delay is the worst of all evils.
Finance, investment and housing markets rely to a large extent on their ability to predict the future. Their financial and economic scenarios are often the only guide would-be investors have in determining how to act with confidence.
During the last year in particular, the confused, protracted delays caused by Theresa May’s inability to negotiate a suitable Brexit deal might have contributed to a lack of activity in property sales. Financial experts and property investors alike have been patiently waiting to discover how the conclusion of Brexit will affect the value of homes in the UK.
Recent Property Sales
Property experts often refer to the data gathered at six-monthly intervals by the HMRC regarding transactions in the housing market.
Following the referendum of 2016 the slight reduction in property transactions has since remained stable indicating Brexit has had a mild impact compared to the financial crash of 2008-09 when the number of sales fell far more drastically. Factors such as the 2016 buy-to-let surcharge of 3% on landlords’ investments might have actually contributed more to the reduction in sales.
London Compared to the Rest of the UK
Average house prices within the UK and the affect of the country’s decision to leave the EU are reflected in regional property prices. The growth in prices in London has slumped by 2% whereas in Northern Ireland it has increased by 3.47% with the Midlands and the north of England not far behind at 3%. Scotland has remained fairly stable.
A detailed analysis of how people voted in the referendum and data from subsequent opinion polls have highlighted London’s stance as the most pro-European Union region in the UK. The north, Wales, Midlands and Northern Ireland are ardent leavers.
Confidence in property investment is obviously flourishing beyond the capital due to whether the referendum result is regarded as a success.
Property prices in London are hugely exaggerated, contributing to a reduction in sales concerning pro-remain residents who can only envisage leaving the EU as a financial disaster. London’s affluent property owners also fear the impact a possible socialist government might have on interest rates following an early general election if Brexit isn’t delivered.
Predicting Post-Brexit Prices
With no precedent for a member state leaving the EU, the predictions of the Bank of England’s governor, Mark Carney, that property prices will inevitably sink into a catastrophic decline of approximately 35% cannot be anything more than guesswork.
A less worrying slump of only 10% is suggested by the Office of Budget Responsibility. Forecasts after the 2016 referendum predicted a reduction in the UK’s economic growth following the leave result. In reality, the country’s GDP has actually maintained a positive level proving that expert forecasts are by no means accurate.
Do-it-Yourself House Valuations
With the advice of financial experts as uncertain as the terms of the UK’s departure from the EU, homeowners are beginning to make their own judgements on the UK property market. With the help of easy-to-use online tools homeowners in different counties of the UK can find useful guidelines on how much their properties are worth.
Other online tools such as the PropertyPriceAdvice.co.uk’s budget calculator provide instant estimates of how much prospective buyers can realistically expect to spend according to their salaries and assets. Such tools are not meant to be 100% accurate but in the absence of reliable financial predictions they are giving homeowners the confidence and independence to make their own forecasts and decisions.
Is Brexit Uncertainty finally coming to an End?
The government’s recent change of leadership has finally started to give Brexit the impetus it was lacking. With Boris Johnson’s clear intention that the UK will finalise its departure from the EU on October 31st, financial investors can once again start to plan their strategies with a degree of certainty.
Cautious homeowners who have purposely delayed buying and selling properties until Brexit reaches a conclusion will finally realise they can move on with confidence. Consequently, some experts are expecting a sudden and significant increase in property transactions despite the Bank of England’s predictions.
With interest rates currently set low, some property investors might be tempted to purchase homes before any change is implemented following Brexit’s conclusion.
As a no-deal Brexit appears the most likely outcome, those predicting dire consequences should balance centuries of growth within an independent UK against forty years of EU membership. The certainty to be gained from Brexit finally being implemented will no doubt encourage healthy investment in the resilient property market, even in London.