How will Brexit affect house prices?

How will Brexit affect house prices?

One of the big topics surrounding the whole Brexit debate relates to its potential impact upon the property market in the UK. In the run up to the historic vote on 23rd June 2016, the former Chancellor George Osborne warned that, according to Treasury figures, house prices could fall by up to 18% over two years in the event of a decision to leave the EU. Independent experts were similarly gloomy, with Richard Donnell, insight director at property consultancy Hometrack, claiming that the “immediate impact [of leaving the EU] is likely to be a fall in housing turnover and a rapid deceleration in house price growth” with the effects being particularly keenly felt by the “London housing market, which is fully valued and already facing headwinds”. Analysts at French bank Société Générale predicted that Brexit could burst the London property bubble, precipitating a 30 - 50% drop in the value of homes across the capital.

Short term effects vs long term predictions

So what has actually happened to property prices post-Brexit? According to Britain’s largest mortgage lender Halifax, average house prices fell by 1% in the month following the referendum decision to leave the European Union. On the other hand, the Nationwide Building Society saw price gains of 0.5% during the same month. To further complicate the picture, a survey by the Royal Institution of Chartered Surveyors (RICS) found that inquiries from new buyers declined “significantly” during June, down on average by 36%, the lowest level since the economic crisis of 2008. However, a subsequent RICS survey indicated that house price inflation could accelerate over the next 12 months, with their chief economist Simon Rubinsohn noting that “the rebound in the key 12-month indicators in the July survey suggests that confidence remains more resilient than might have been anticipated.”

Although it’s difficult to identify any obvious and universal trends, predictions of the effect of Brexit upon property prices do seem to be rather more conservative now that the dust has settled, especially when compared to the pre-referendum forecasts from the Treasury, and one of the latest forecasts by estate agency Countrywide predicts that house prices will fall by 1% over 2017 but will then rise by 2% in the following year.

Helping you to buy a home post-Brexit

Despite the lack of clarity of the eventual direction of the housing market, many home buyers will be unwilling to wait several years to find out what will happen once Brexit negotiations have finally concluded. Whether you were in the leave or remain camp, if you are looking to buy or a sell your home, the residential property experts at W H Matthews & Co can guide you through the potential pitfalls of the conveyancing process. Give us a call today to find out how we can help you navigate the confusing post-Brexit housing market.