Brexit and What it Means for Housing
There are changes aplenty in store as the UK ventures into uncharted waters following the Brexit vote, yet it seems that no one can predict, with any level of certainty at least what those changes might entail. Might there be a mass-exodus of those opposed to the decision, or might the country be on the verge of huge positive financial reform? It is very difficult to tell.
One major question regards our regularly-debated housing market. How will exiting the union affect what our properties are worth?
Post-referendum, the value of the pound against the dollar declined by a dramatic 17% initially, revealing financial panic in the country. However, the economy found itself gingerly and gradually on the mend once more shortly after. Developers seem to be approaching the country’s upcoming political reinvention with cautious optimism after a brief falter in the new-builds market which saw a number of international companies drop out – or consider dropping out – of their UK-based projects.
The concern generated by uncertainty appears to have caused the steady pre-Brexit rise of house-prices to level out somewhat as the market itself slows to a more careful pace. The purchasing of new builds is unlikely to suffer a great deal, as the government’s “Help to Buy” scheme has allowed a large number of first-time homeowners to attain newly built residences, and the number of success stories of this kind continue to rise. Construction companies are already less willing to take risks, however, causing the actual production of these new residences to slow, and property development rates as a whole are predicted to drop by at least 30%. Due to a general sense of hesitation within the market – a result of how little we are able to predict of the knock-on financial effects of the Brexit vote – transaction rates have suffered quite a decrease since winter 2016, and any further movement will be highly difficult to predict until Brexit comes into full force and the UK is rendered independent. On a positive note, however, interest rates on mortgages have remained low.
A notable change can be seen in the behaviour of overseas property investors. Due to the decline of the pound following the referendum, housing prices have been rendered particularly cheap within the foreign market while remaining relatively unmoved within the domestic one, and house prices both inside and outside of London may very well be due to rise as businesses from outside the UK take advantage of this. It is possible that this will result in a considerable money from the UK property market being siphoned out of the country’s economy should this rather concerning trend continue. As part of the aim of Brexit was to boost the UK’s financial recovery and assert its independence, this shift seems to demonstrate one area where the approach has failed.
Despite grim predictions to date, however, no traumatic crash has taken place. While stocks and shares in the property market certainly took an initial dive, they are gradually approaching a full recovery, and it appears that the country’s typically stoic optimism may be keeping us afloat.