House price predictions in the event of a no-deal Brexit
The year after the referendum, the rate of house price growth fell everywhere in the UK except Scotland.
Two years later, in June 2018, year-on-year price growth had improved in Scotland, Northern Ireland and Wales. Now, with the approach of Brexit on 31 October 2019, the rate of growth has slowed for all countries yet again.
However, some would argue that this slowdown is a natural market correction and could have happened anyway.
Here’s what the financial experts are saying
Of course, it’s impossible to say with any certainty how Brexit has and will continue to influence house prices and sales volumes. Here’s what some of the experts predict.
Mark Carney, Bank of England governor, said in September 2018 that leaving the EU without a deal could result in property prices falling by a third. In February this year, he warned that UK growth was certain to drop if we left the EU without a deal.
Earlier this month, the Office for Budget Responsibility forecast that a no-deal Brexit would cause house prices to fall by almost 10% by mid-2021.
However, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, doesn’t expect this period of falling house prices to continue: “Low unemployment and stable mortgage rates are sustaining housing demand, despite Brexit uncertainty. Accordingly, we still expect year-over-year growth in the official measure of house prices to stabilise at about 1.5% this year.”
What do those in the housing industry predict?
According to Chris Norris, director of policy and practice at the National Landlords Association: “It is still too early to predict what impact Brexit will have on property values. A weakening of the appeal of UK investment could drive prices down, or a lack of certainty could drive up interest in the relative stability of bricks and mortar. It is likely that landlords with established, well-capitalised portfolios will fare reasonably well. However, those heavily reliant on finance may find uncertain conditions more troubling.”
Executive chairman of the Home Builders Federation, Stewart Baseley: “Unlike the wider housing market, where transactions have dropped considerably from the historical norm, the new-build market has remained strong in recent months – a trend we expect to continue. The confirmation in the Budget of an extension to the Help to Buy scheme was welcome. The scheme is ensuring demand for new-build homes remains strong [and]… the certainty of demand is enabling builders to plan ahead to increase output in the coming years, as is demonstrated by the record high number of planning permissions being granted. To enable increases to be delivered, the industry needs certainty about future labour supply. It is essential that, post-Brexit, the industry continues to be able to access skilled labour from abroad if housing targets are to be met.”
Mark Hayward, chief executive of NAEA Propertymark, commented: “Brexit is undoubtedly causing uncertainty in the housing market, which in turn affects sentiment and decision-making. With details of the final deal still unknown, we’re seeing both buyers and sellers putting their plans on hold. Once the details are clearer, we’ll have a degree of certainty, which may trigger a flurry of activity.”
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