What could Brexit mean for the housing market? We’ve pulled together some information from leading experts who are speculating on what may happen
Unless you’ve been living underneath a massive rock, you’re probably well aware that the June referendum means the UK will be leaving the EU. As there are things that still remain uncertain, many people are speculating what the economy will look like and what will happen to the UK as a whole as the months continue in a post-Brexit world.
With regards to the housing market, many experts have been wondering what will happen as well. We did some investigation and gathered views from house market experts from around UK, and here’s what we found out.
London may become more affordable
It’s something we all know: London isn’t cheap. But some experts are now speculating that London may begin to tilt the other way and possibly become a more affordable area to live in. In a recent study conducted by The Standard, data suggests that there was a surge in “failed sales” since June 23rd, with some reports even suggesting a 12% drop. Additionally, London property analysts LonRes found that the number of properties which had price drops rose by 163% within 12 days after the referendum.
Unfortunately, London becoming more affordable isn’t necessarily the best thing. As buyers are becoming more reluctant and are withdrawing from home purchasing, sellers are having a harder time selling their homes, and subsequently have to lower home prices. It’s still too early to call whether or not this trend will continue or even maintain indefinitely, but the London housing market is something to keep an eye on in the coming months.
What about the housing shortage?
London may be becoming more affordable, but the whole of the UK might become more expensive in the months and years to come. The current housing shortage crisis has been a known problem, with the government even pledging last year to build one million homes by 2020. Already behind this target, some speculators are fearful of an even bigger slowdown in home construction.
Some of the biggest house builders in the UK have already voiced that their supply chains may slow down, putting them behind their schedules. As fewer homes become available, prices may begin to increase. Nothing’s for certain, but this is another hot topic to keep your eye on as the months go on in a post-Brexit economy.
How will lowered interest rates affect the market?
At the start of August the Bank of England announced that it was going to cut interests rates to a new record low of 0.25% in hopes of boosting the UK economy in the wake of the June referendum. Current homeowners who have tracker mortgages (mortgages whose repayment rate tracks interest rates) are benefitting from this cut, as their monthly payments may decrease now. As approximately one in 5 mortgage holders have tracker mortgages, the interest rate cuts comes as good news for many UK homeowners.
What’s not yet determined is what will happen with home loans that are on the standard variable rate, and for many, it’ll be up to the lender. Some providers may decide a to pass on a partial cut, others may pass the cut on in full, and some may not even make any changes as the interest rates are at a historical low.
Predictions for the rest of the year
The general consensus is simply that many housing market speculators are still unsure as to what exactly will happen in the coming months in the post-Brexit economy. Generally, the referendum has had a less severe impact than what many were expecting, but many point out that they’re still waiting for the dust to settle. What is for certain, however, is that the house sector, along with many others, is something that will be watched carefully as the months go by.