What has Brexit done to the housing market?
In the months leading up to the EU referendum vote there was much speculation regarding the possible financial implications that might occur in many areas of the British economy, the housing market was no exception to this. Experts predicted that the housing market would most likely be hit by uncertainty with the expectation that house prices would fall. It was, however, felt that this might only occur as a short-term drop in both house prices and sales, according to The Guardian.
In the days following the Brexit vote share prices for many major house builders plummeted as investors reacted to the vote result. As potential house buyers come to terms with the fact that there will be economic uncertainty for quite some time, many will be unwilling to take on the financial risk of purchasing property until the market settles. In the short term this will have an effect on the housing market – less demand for new housing, leading to more financial problems for house builders.
It has now been two months since the results of the historical vote were announced, and whilst property purchases are one of the first things that normally grind to a halt during a period of economic uncertainty the figures for the first month after Brexit show that the housing market has remained steady. In terms of residential purchases, the figures published by HM Revenue and Customs show a slight decrease; 94,550 homes bought in July in comparison to 95,430 purchased in June. During the summer months there is often a dip in house purchases and this slight decrease is in line with figures seen for previous years.
The commercial property market has not fared quite as well; sales of non-residential properties having fallen over the last month; these figures are also down in comparisn to previous years.
It is hard to say what will happen to the housing market in the long term, article 50 has not yet been triggered and the government seems to be in no rush to do so. The truth is that Brexit is unchartered territory, nobody can say for certain what will happen, or how the markets will react.
At the moment, however, a number of financial organisations, and industry experts including the Estate Agent Countrywide believe that over the course of 2017 house prices across the UK will see an average reduction of 1%, as a result of the growth of house price slowing down. Only time will tell just what will affect this will have on the housing market in the longer term but as always, we’re here to help you whether you’re currently looking to purchase or sell your property.