A Brief Look at House Prices Before and Beyond Brexit

Political flux continues to create enormous uncertainty in the UK housing market. Here’s a brief look at what the numbers and the experts are saying about house prices before and beyond Brexit.

Where We’ve Been

Thanks to house price indices and transaction statistics, it’s easy to see how unsettled the property market has been in recent years:

• In general, house prices followed a fairly normal real estate pattern after the 2016 referendum – plateauing each August and spiking each April. But with Brexit looming, prices fell dramatically in August 2018 and continued to decrease monthly until April this year.
• Year-on-year house price changes, meanwhile, dropped sharply almost everywhere in the UK for the year following the referendum. After improving somewhat at June 2018, they’d fallen again at June 2019.
• Year-on-year sales transaction volumes decreased by a notable 12% at July of this year – an event many financial experts attribute directly to October’s Brexit deadline.

Where We May Be Going

According to accountancy firm KPMG, average house prices in the UK are likely to experience a nationwide decline of about 6% in 2020 – with a drop of 10-20% possible. But real estate experts suggest that a potential post-Brexit price crash shouldn’t stand in the way of buyers looking for long-term property.

While short-term turnovers should be approached with caution, homeowners planning to stay put for the next five years or so are unlikely to be affected by temporary price fluctuations. Recent price drops in some areas are even creating a slight buyer’s market.

The Future of New Builds

Unlike the general housing market, property development companies claim the new-build sector is holding strong and steady. In fact, with the Help to Buy program supporting the demand for newly built homes, there’s been a significant increase in planning permissions. The biggest question seems to be whether easy access to skilled labour from abroad will continue, post-Brexit.

Time for Buy to Let?

With rents rising – possibly in response to this year’s tenant fee ban – and many landlords rethinking their positions, there are some decent UK buy to let deals to be had. The key, say industry experts, is to pin down your long-term goals and take Brexit-related caveats like these into account:

• buy to let property prices may be driven down in future by a depleted interest in UK investment,
• changes in immigration policies could reduce the rental demand overall

It’s important to budget carefully and confirm that your ongoing ability to support a buy to let mortgage is secure before considering any property finance investment.

Flexible Mortgages Remain Key

Mortgage brokers are advising that, despite attractively low mortgage and bridge loan rates, property buyers should resist heat-of-the-moment decisions they may regret later.

Rather than leaping into a fixed mortgage rate to achieve financial security, for example, it’s best to explore flexible options that will allow you to remortgage if rates change – especially in light of rumours supporting a base rate cut before the end of the year.