Impact of Brexit on the Property Market
Brexit was a major event that left many industries worried about the future of their sectors. One of the areas of concern was the property market.
Before the referendum vote in 2016, George Osborne, the then-serving Chancellor of the Exchequer, warned that UK house prices could plummet by up to 18% if the country voted in favour of Brexit.
Despite widespread media and political discourse that seesaws from one extreme to the other, making very bleak or very optimistic predictions, the housing market remains largely unaffected by Brexit. In fact, the reality is that most of the claims about Brexit’s impact on the housing market were inaccurate.
Brexit may have had a minor impact and may continue to have one for the foreseeable future, but the housing market remains largely unaffected by it. What we’re seeing now is more due to interest rates, disruption in supply, and migration across the country.
In the time between the 2016 vote and the details revealed in 2020, the UK saw plenty of shifts and movements across the board, many of which contributed more to house prices than Brexit did. From June 2016 to March 2021, the average UK home’s cost increased from £212,000 to around £256,000, which is close to 20% increase. By June 2022, the average UK home was valued at around £286,000.
Despite uncertainty, both economically and politically, demand for property in the UK remains strong, and investment in real estate is still going strong. Since both domestic and foreign buyers see UK real estate, especially residential, as a secure investment, they are likely to favour brick and mortar assets in times of uncertainty and national transition.
Investing in the Property Market
When investing in the property market, landlords and investors should consider checking what prices are like compared to a year ago. They should also take a fresh look at their local rental market to see if demand is changing and consider reviewing their buy-to-let mortgages and moving to a fixed rate deal to even out any fluctuating interest rates.
Having a back-up plan in the arsenal for if rents must fall is also necessary, and one can consider insurance to protect against arrears. If an investor needs to sell, they should set themselves a minimum price to ensure they do not lose out.
Conclusion
In conclusion, the impact of Brexit on the property market has been minor, and the market has continued to perform well. However, landlords and investors should be careful and make informed decisions when investing in the property market.
Common questions about brexits effect on the property market
Brexit has had a significant impact on the UK property market, causing uncertainty and affecting the demand for properties. Following the Brexit vote, property prices in some areas of the UK, particularly London, experienced a slowdown in growth. This was largely due to the decrease in foreign investment as well as the cautious approach taken by both buyers and sellers. However, it is worth noting that the UK property market has remained resilient overall, with the demand for housing remaining strong in many areas.
One of the biggest concerns for the UK property market post-Brexit is the potential impact on the economy, which could have a knock-on effect on the housing market. The uncertainty surrounding Brexit and the negotiations with the EU is also a concern, as it could affect the confidence of both buyers and sellers. Additionally, changes to immigration policy could have an impact on demand for rental properties.
The rental market has also been affected by Brexit, with uncertainty leading to a decrease in the number of EU nationals looking to rent properties in the UK. This has had an impact on demand for rental properties, particularly in London and other major cities. However, it is worth noting that the demand for rental properties from UK nationals remains strong.
While foreign investment has slowed down following the Brexit vote, there are still foreign investors who are interested in buying UK property. The decrease in the value of the pound has made UK property more affordable for foreign buyers, particularly those from the US and China. However, there are concerns that any future changes to immigration policy could have a negative impact on foreign investment in the UK property market.
Mortgage rates have remained low in the UK, despite the uncertainty surrounding Brexit. The Bank of England has kept the base rate at a historic low, which has helped to keep mortgage rates low. However, there are concerns that any future changes to the economy could lead to an increase in interest rates, which would affect mortgage rates.
The outlook for the UK property market post-Brexit remains uncertain. While the market has remained resilient overall, there are concerns that any future changes to the economy or immigration policy could have a negative impact. However, there are also opportunities for growth, particularly in areas outside of London and the South East, where house prices are more affordable. Ultimately, the outlook for the UK property market will depend on a range of factors, including the outcome of Brexit negotiations and the state of the UK economy.
