How BREXIT will affect House Prices?
Published by Property Saviour
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July 9, 2016 - Read time: 3 minutes
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House price growth begins to cool as economists look for signs of Brexit effect House prices have started to cool down post EU referendum, as British national has voted for BREXIT.
There is uncertainty in the housing market as buyers have lost confidence leaving many sellers stuck with their properties on market. Solicitors have noticed a number of buyers are pulling out of their proposed purchasers following BREXIT as buyers believe that a correction in the UK property market is imminent.
According to Halifax, the rate of annual house price growth in the UK was 8.4pc. This was down on May’s rate of 9.2pc, and has hit the lowest level since July 2015. Halifax measures house price index for whole of month of June. Martin Ellis, Halifax’s housing economist, said: “House prices continue to increase, albeit at a slower rate, but this precedes the EU referendum result, therefore it is far too early to determine any impact since.” He went on to say that “there is evidence that the underlying pace of house growth may be easing”.
Howard Archer of IHS Global Insight has warned that price growth is slowing down. “We believe that the prospects for the housing market have deteriorated markedly following the Brexit vote,” he said. “Housing market activity and prices now look to be at very serious risk of an extended, marked downturn following the UK’s vote to leave the EU.” Acknowledging that house price decline with be limited because of a reduced supply, Mr. Archer has predicted that prices could fall between 5-7% in 2016 and 2017.
Hansen Lu, at Capital Economics, said: “we think economic growth will be tepid in the remainder of the year, we don’t expect a recession or sharp rise in unemployment. “Consequently, we don’t expect a large rise in the number of forced sellers – suggesting that house price growth will slow sharply, but won’t turn negative.”
Jeremy Leaf is a north London based estate agent and a former RICS residential chairman, said: “Although the Halifax report shows that house price growth is slowing, it also reveals that the market showed surprising resilience in the period immediately following the increase in stamp duty of 3pc in April for buy-to-let landlords, leading up to the referendum. “Despite extreme nervousness at that time as nobody knew what was going to happen, first-time buyers took advantage of opportunities left by investors bringing forward purchases to the first quarter of the year.” Halifax also reported that the ratio between average house prices rose to 5.7 times earnings in June. Is the highest level since October 2007 which raises concerns around affordability and those buyers may be over-stretching their affordability when buying their homes?
Russell Quirk is Chief Executive of online agent eMoov, said: “Today’s figures show, even in the wake of Brexit, that theUK housing market is fundamentally strong. “With a continuing, acute shortage of new housing being built and a growing population even if immigration numbers are now curtailed, the demand versus supply imbalance and the prospect of even lower interest rates will underpin the market. Even if there are short-term confidence wobbles fuelled by a media hungry for bad news.”
BREXIT means uncertainty for economy. International employers will be looking at impact of BREXIT and weaker pound sterling. It may be that EU employers will look to relocate their operations to EU states. A new Prime Minister needs to be appointed, and both Labour and Conservatives parties are having leadership contests. New Prime Minister will be charged with negotiating a trade deal with EU – and we do not know how good or bad this deal may be for Britain. Uncertainty in economy and potential relocation of large employers to EU could only mean job losses. Imports from EU could cost more meaning that pound sterling has reduced buying power. This means that property prices will be affected as people will less disposable income than pre BREXIT vote.
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