The Brexit Effect on House Prices26th January 2017
Brexit has created an uncertainty for investors in the property world and it is incredibly hard to second guess what will happen over the next 12 months.
The aftermath that followed Post-Brexit, the UKs decision to leave the European Union, resulted in share prices and profits tumbling, not to mention currency, for housebuilders, landlords and estate agents.
We are only a couple of weeks into the beginning of the year and our crystal ball isn’t any clearer in terms of making predictions for the UK property market and what lies ahead this year.
However, expert opinion seems to suggest that the UK isn’t headed for a down turn but rather a slower incline, something similar to a three per cent growth within the property market.
Robert Gardner, Nationwide’s chief economist, said prospects for UK house prices in 2017 would “depend crucially on developments in the wider economy, around which there is a greater degree of uncertainty than usual”.
“Like most forecasters, including the Bank of England, we expect the UK economy to slow modestly next year, which is likely to result in less robust labour market conditions and modestly slower house price growth,” he said.
“But we continue to think a small gain… is more likely than a decline… since low interest rates are expected to help underpin demand, while a shortage of homes on the market will continue to provide support for house prices.”
The turbulence in April that surrounded the Brexit decision did not have as much as an impact as initially thought. In the first few months there was certainly an adverse effect on house buying confidence, but this confidence soon returned, as reported by the Halifax.
Annual house price inflation rose in December across the UK, the lender said, with prices rising by 6.5 per cent in the year to the end of December. That was up from a rate of 6.0 per cent in November and followed a 5.2 per cent rise in October.
Between March and October 2016, inflation had been easing. The latest increase leaves the average UK house price at £222,484, according to the Halifax, another record level.
However with inflation now rising rapidly and faster than expected, and the resulting impact on increased costs to consumer spending, low interest rates are set to remain – aimed at encouraging mortgages to remain affordable. This helps with demand for property and with a shortage of housing for sale, means prices will continue to rise.
It is clear that the market has remained resilient and for now it is stable and perhaps property seems to be a more reliable investment compared to other types of investing platforms.
As we await the Housing White Paper, published later this month, expected to set out how the government is planning help boost house building, and Article 50 and the UKs formal exit from the European Union, we can be sure that the year ahead will be certainly be interesting and unprecedented.
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