What Will Brexit Mean For The UK Housing Market?
The shockwaves from the vote for Brexit continue to ripple through our national pond.
The truth is that no-one can be 100% certain what the immediate effects of the vote may be, or of how things will play out in the long-term.
Despite this, everyone seems to have an opinion!
What is certain is that the decision to leave the EU will continue to shape our economy and society for many years to come.
Moving With The Times?
- If you are considering moving house, is it a good time or a bad time to do so?
- Might you be better off looking at extending your current living space and staying where you are?
Let’s take a look at what Brexit may mean for the UK housing market.
We have seen time and time again that nothing spooks our markets more than uncertainty.
And the Brexit vote does not, unfortunately, bring any clarity or resolution. We all must wait to see how things will play out over a time period that, at best, is predicted to take at least two years.
During this time house buyers and sellers alike may be expected to keep their powder dry, awaiting developments.
A survey by accountants KPMG found that 66% of real estate experts believed that “Britain leaving the EU would have a negative impact on inbound cross-border investment”.
Indeed, following the decision to leave, some estate agents were reporting that overseas buyers are saving more than £40,000 on London property prices.
Yet, it is mainly in London’s high-value properties that overseas investment plays a significant role – it shouldn’t affect your average house price in Brighton or East Sussex too much.
Demand From Immigration
European immigration is likely to fall.
This will inevitably reduce demand for houses and could affect house prices negatively. Yet, at the same time this may hit the construction sector – where 12% of the workforce are EU nationals – which will only add to our current housing shortage and lead to a rise, not a fall, in prices.
Again: uncertainty reigns.
What They Say
A number of predictions have been bandied about – the majority of them pointing to troubles ahead for the housing market.
Here are a few significant people and organisations that have indulged in Brexit crystal ball gazing.
- George Osborne, the Chancellor, warns that house prices could fall by as much as 18% by 2018
- Ratings agency Fitch states that house prices could crash by 25%
- Research house Bernstein predicts the worst scenario, with property prices plummeting by as much as 30%
- A report by the Centre for Economics and Business Research forecasts that leaving the EU could reduce the value of UK housing by £26.5bn by 2018
- Richard Donnell, head of research at Hometrack, suggests there will be a 5-10% fall in the number of houses bought and sold in the UK in the next two years
- Online property portal Zoopla believes that the average UK property value will fall £53,000 from its current level of £297,000
What They Advise
Despite these negative predictions, and the more ominous background of uncertainty and stability, experts are being careful not to be alarmist.
Mark Carney, the governor of the Bank of England, merely urged caution and common sense when he said that:
“We are advising people to be prudent. If you are taking out a mortgage, at some stage during the life of that mortgage, conditions will be difficult. You want to be able to ensure that you can service that mortgage even if times are tough, so think about where interest rates will go, where wages will go in the lifetime of that mortgage.”
This advice is echoed by property market experts, including Virginia Wallis in The Guardian and Ray Boulger in the London Evening Standard, who have both stated that as long as you have a reasonable deposit and are looking to live in the home you buy long-term, you should go ahead with your purchase.
It’s all sensible advice, yet the underlying confidence behind it does little to shake that feeling of uncertainty.
What Do You Think?
The fact is that no-one knows what may lie ahead. We all have our own ideas – why not let us know yours in the comments below?
At Woodhart we are expecting that many people may decide to wait and see. They may choose to stay in their current house until the Brexit dust settles.
Uncertainty may reign – but you can always count on us!