Crikey, a lot has happened in Britain over the summer! We’ve got a new PM, England got kicked out of Euro 2016 and Brexit happened. That’s right, the people of Britain have decided they’ve had enough of the European Union and have voted to leave. Only history can tell us if it was the right decision or not and at the moment, everything is up in the air. So, what does this period of uncertainty mean for the UK housing market?
According to the NAEA (National Association of Estate Agents) after the referendum result, supply of available properties fell, as there’s uncertainty in the market. 57% of agents reported a drop in interest from people looking to buy. A poll by removals firm Bishop’s Move has found that 13% of people involved in their sample have pulled out of transactions altogether. Nationally, Halifax has reported that prices have decreased by 1%, which takes the average UK house price down to £233,254. This is always to be expected and isn’t particularly surprising as the housing market is always susceptible to a decrease in interest in political and economic turmoil. The market always reacts to change.
The trouble with Brexit is the indecision. When things have decisively changed, the market can re-group and assert itself, but the nature of Brexit is that article 50 hasn’t been invoked yet and no-one really know when that will be, so the uncertainty in the market looks set to continue until we know.
But on the positive side, the figures leading up to the referendum were quite encouraging and June saw an increase in demand, but this was possibly because experts and the media believed that a ‘remain’ vote would prevail; buyers could have been reflecting their pragmatism. The Housing Minister, Brandon Lewis, claimed the government are committed to building 1 million new homes over the next 5 years and this is thought to still be the case, so hopefully demand in the market will build again. The housing crisis means that the market is still competitive and demand when new homes are built can stabilise the market.
These bumps in the road will hopefully be more short-term glitches, instead of long-term trends. People will always need to have somewhere to live and the desire to own a home will always exist, so the housing market is a robust model in that respect. The Bank of England has made a historic 0.25 cut in interest rates too, which should help house prices to recover in the UK.
At Home Estate Agents, we’re confident that the UK housing market can pull itself together and rally on. It’s faced challenges before, so bring it on Brexit!