How Brexit Affected the Property Market
Brexit was a significant event that caused concern across many industries, and the property market was no exception.
Before the 2016 referendum, George Osborne, then Chancellor of the Exchequer, warned that UK house prices could drop by as much as 18% if the UK voted for Brexit.
Despite the dramatic predictions, both positive and negative, the housing market has remained relatively unaffected by Brexit. In reality, many of the claims regarding Brexit’s effect on house prices were overstated.
While Brexit may have had a minor effect and could continue to do so in the future, the state of the housing market is more influenced by factors like interest rates, supply chain disruptions, and internal migration rather than Brexit itself.
Between the referendum in 2016 and the UK’s full departure in 2020, there were significant shifts in the economy that had a greater impact on property prices than Brexit. For example, from June 2016 to March 2021, the average price of a UK home rose from £212,000 to around £256,000—an increase of nearly 20%. By June 2022, the average home price had reached approximately £286,000.
Despite ongoing political and economic uncertainties, demand for property in the UK remains high, and investment in real estate is robust. Both domestic and international buyers continue to view UK real estate, particularly residential property, as a stable investment during uncertain times.
Investing in Property
For landlords and investors, it’s essential to assess current property prices compared to the previous year. Reviewing the local rental market to gauge changing demand is also critical, as is considering switching to a fixed-rate mortgage to avoid the risks of fluctuating interest rates.
It’s advisable to have a backup plan in case rental prices decline, and insurance can help protect against arrears. If selling is necessary, setting a minimum selling price will ensure that investors don’t make significant losses.
Conclusion
In summary, Brexit’s effect on the property market has been minimal, with the market continuing to perform well. However, landlords and investors should still approach property investments with caution and make well-informed decisions.
Common questions about brexits effect on the property market
Brexit has had a notable influence on the UK property market, creating uncertainty and influencing property demand. After the Brexit vote, property prices in certain regions, especially London, saw a slowdown in growth. This was mainly driven by a decline in foreign investment and a more cautious stance from both buyers and sellers. However, it’s important to highlight that the UK property market has shown remarkable resilience, with strong demand for housing in many areas continuing.
One of the primary concerns for the UK property market following Brexit is the potential economic impact, which could ripple through to the housing sector. The ongoing uncertainty around Brexit and the negotiations with the EU also raises concerns, as it may undermine the confidence of both buyers and sellers. Moreover, changes in immigration policies could influence the demand for rental properties.
The rental market has been influenced by Brexit, with the uncertainty leading to a reduction in the number of EU nationals seeking to rent properties in the UK. This has affected demand for rental properties, especially in London and other large cities. However, it’s important to note that demand from UK nationals for rental properties remains robust.
Although foreign investment has decreased since the Brexit vote, there are still international buyers interested in UK property. The decline in the value of the pound has made UK property more attractive to foreign investors, especially those from the US and China. However, concerns remain that potential changes to immigration policies could negatively affect foreign investment in the UK property market.
Despite the ongoing uncertainty surrounding Brexit, mortgage rates in the UK have remained relatively low. The Bank of England has maintained the base rate at historically low levels, helping to keep mortgage rates stable. However, there are concerns that any future economic changes could lead to a rise in interest rates, which would, in turn, impact 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.