Brexit effect on house prices
One of the key reasons why or how will Brexit affect house prices, in a negative way, is the exodus of migrants from EU nations. Major banks relocating and the once weaker and now slightly stronger Pound stopping overseas buyers hiking the price up. The demand for rentals would fall, the yields not being the same as 2-3 years ago and therefore a fall in house prices was predicted.
Not only is Brexit in line to affect house prices, the new taxing regulation on Buy-to-Lets, hike on Stamp Duties on 2nd properties and for me the main reason would be Crossrail.
“It seems that recession needs a whole page on its own”
Looking at the above, the global economic slowdown seems to be matched in timing with the Conservative’s mishandling of Brexit referendums, which, by the way may go to a 2nd vote. Crossrail and new taxes/stamp duties all seem to much of a coincidence to be running in parallels on the calendar. It is very clear that while people start saving in the 7-year cycle of property going up and then going down, London and the South East will start to ease the pressure on First Time Buyers by allowing hub cities and towns to take throttle off rising prices.
Brexit is here to give the UK a fresh clean slate
(or meant to be) and its own two feet to walk on and allow it to be less dependent on an economy fuelled and driven by the housing sector that includes the building and timber merchants, the bathroom, designer tiles and gardening markets. We can’t simply say Brexit is the clear reason why house prices are going to fall, it’s part of the reason but not the main reason.
That brings us to interest rates which were near zero for a very long time.
Buyers are also very cautious following the Bank of England’s decision to hike the rates in November to 0.50%. The economy has not given savers any real returns through the banks and only allowed a property boom with money readily available. Stringent mortgage rules and tighter regulation means not everyone will get a mortgage. And with less and less buyers on the markets and sellers with decent equities in their home will as usual panic and want to cash in on their premiums, thus knocking off £30-60,000 off the asking price which will come across as a fall but not on the wider markets. Brexit crash has nothing to do with prices falling, for now.
Brexit will only be a healthy correction and allow a natural rise and fall unaffected by rumours and global downturn in economics leading to more jobs and demand for goods the UK that can hopefully push up the minimum wage to over £10 levels. Because in an ideal world a salary of £40,000 can afford to pay a mortgage of £1500 per month but forget that dream if don’t you have a deposit of £200,000 on a property worth £500,000. So, the 7-year cycle of saving your deposit started when the Brexit referendum was being voted.
In the Autumn budget of 2017, RICSs said that prices would rise in parts of the UK with Northern Ireland, Scotland, Wales and the North West of England having the strongest gains. But that would be followed by a slump in asking prices across London and the South East eventually dragging down prices in the rest of the UK,all in all prices would remain flat.
And with the government still aiming its ambition of building 300,000 homes a year would increase supply in a time where investors are staying away from the housing market and focusing on Semi-Commercial properties due to lower taxing, Brexit would still not be the main reason in a fall in house prices.
However RICS have stated that it won’t be until the -2020s for these measure to come into effect to alleviate the immediate housing crisis.
“2017 was meant to be the year of a Government step-change in housing policy, but it seems we’ll have to wait a little while longer for anything truly transformative to drive up supply,”
said RICS parliamentary affairs manager Lewis Johnston
To simply make Brexit a scapegoat in house prices falling is a very unfair way of looking out the scenario, interest rates and stamp duty rises are the main factors coupled with personal taxation laws on landlords income hitting the market the most.
Living in London has its perks
but the cost of living in a diverse and highly sophisticated city such as London for a family of 4 outweighs the perks. Moving outside London or areas such as Dagenham and Barking which is the last of the untouched areas where average prices are £300,000 for home will also be a thing of the past as that part of the Thames will soon have the Stratford/Docklands type constructions taking place.
The only reason why Brexit is being blamed by blind critics who once predicted a 40% crash is because they failed to acknowledge the other important factors that were in play. Nowadays there are more positives around Brexit and if the government can sort the exit bill out, we will see a clearer path and more and more buyers who deserve a better deal get on the ladder before they are 50.
Brexit will hopefully happen without too much confusion and impact on the housing sector and the sooner the government starts building it’s 300,000 per year, Brexit will be the last reason house prices are affected.