The property market has long been a British national obsession. So of course, it went without saying that when the country’s electorate made its shock decision to leave the EU in June’s referendum, many people’s thoughts quickly turned to their prospects of purchasing property in the aftermath.
As for the exact effect that Brexit will have on property purchasing in the UK… well, let’s have a closer look.
What will happen to property values?
This is surely the million-pound question (jokes about sterling’s Brexit-induced weakness aside). There have been widespread predictions that the sheer uncertainty surrounding the referendum result aftermath will mute house prices.
Treasury predictions of prices dropping by up to 18% in the two years following the vote – as a result of the “economic shock” causing mortgage costs to shoot up – now look pretty wide of the mark.
A more realistic forecast has come from analysts responding to a recent Reuters poll, suggesting a 2% rise in house prices in 2017 and 2.7% in 2018. A survey carried out prior to the referendum revealed that house prices had been expected to rise twice as fast in the event of a ‘remain’ vote.
Do first-time buyers stand a better chance after Brexit?
As aforementioned, so far, the Brexit vote has failed to produce the dramatic collapse in house prices that had been predicted in some quarters. However, there is still much reason for first-time buyers to be heartened.
As reported by The Week, the proportion of homes bought by first-timers hit 32% in October – the highest figure since records began in 2000. It has been suggested that such buyers are benefiting from a combination of the rapid cooling of house price growth and record low mortgage rates.
Indeed, even 100% loans are making a comeback, with Market Harborough Building Society enabling borrowers to buy a home with no deposit at all, using their parent’s home as security.
What other factors could affect post-Brexit property buying?
The Bank of England’s decision in August to cut its already meagre 0.5% interest rate to a new record low of 0.25% has unquestionably been a boon to home buyers, making already cheap mortgages even more so.
However, there’s no question that the availability of properties for sale remains low. Furthermore, the more nervous homeowners become about the direction of the government’s exit negotiations after the planned activation of the now-infamous Article 50 early next year, the more reluctant they may become to put their property on the market.
The impact may not be as great as many imagine
For all of the uncertainty that Brexit has brought so far, the basic property market conditions of high demand and a lack of supply are likely to remain much the same as they have done for years. After all, as one industry observer was quoted as saying by the Daily Express: “Buying property is not like buying a holiday. No one makes a long-term financial decision purely because of a favourable exchange rate.”
Remember, too, that you continue to have plenty of options to sell your existing home if you would like to enter the market, even in the most stagnant conditions, with companies like Probate Purchasers, for example, serving the specialised needs of those who have recently inherited property.
So, will Brexit massively shake up the process of buying a property in the UK? It might do, but there’s also plenty of evidence to date that the situation will remain a familiar one for the many people contemplating involvement in the market in 2017 and the years to immediately follow.