The groundbreaking decision to leave the European Union has not only caused shockwaves throughout the world, but it has also resulted in a great degree of uncertainty, most notably in the housing market. While it’s obvious that the post-Brexit era is clouded in unpredictability, much of the negative forecasting from remain voters has so far proved to be rather overzealous.
Yes, the pound did fall to its lowest rate for over 30 years within 24 hours of the historic referendum result, but it has been slowly stabilising ever since. Investor confidence has increased, resulting in a 16% increase in the FTSE 100, while consumers’ confidence has remained virtually the same. Experts predicted a huge crash in house prices, but while there were some mild repercussions, things have generally picked up since the aftermath. By and large, it has been business as usual.
The real effects of Brexit will only truly emerge once Theresa May triggers Article 50. The ensuing two-year period of negotiations between the UK and the rest of Europe promises to be a tricky one, which may well impact negatively on the economy. However, the predictions now being cast are significantly warmer compared with the hysteria of 2016. A housing crisis is thankfully not on the horizon, and the price of properties is still projected to increase, albeit at a slower pace.
Perhaps one of the knock-on effects from these negotiations will be a diminished urgency to move home, and an inclination to stay put for the time being, at least until the period of uncertainty is over. It’s fair to say that Brexit has left some homeowners worried, which is why there has been an influx in house extensions, loft conversions and basement renovations, as they represent a safer and cheaper way to get more space.
As the sterling dips against the dollar, the London market seems to benefit somewhat, as this effectively gives a 10% discount to those paying with US dollars. Many foreign investors are eying up opportunities in London and snapping up properties faster than the natives. One area that was predicted to flounder after the referendum was the development of super-luxe properties in the capital, but after a brief respite, it has experienced a resurgence and is starting to bustle again.
The Bank of England’s decisive move in reducing interest rates to a record low of 0.25 should also contribute to allaying the fears of prospective homebuyers. For those scouring the market, putting in a lower bid than usual wouldn’t go far amiss in the current climate, while those looking to sell up should still be able to do so quickly, provided that the pricing is realistic.
While there are conflicting indicators regarding the long-term future of the property market in the post-Brexit era, the short-term certainly seems relatively stable, as opposed to what was foretold. The Royal Institution of Chartered Surveyors are predicting a cumulative 14% increase in property prices over the next five years, which is possibly the most upbeat prognosis to date. With an ever-improving employment rate and competitive mortgage lending rates, there are still great opportunities to take advantage of in the market.
Uncertainty will likely intensify when the UK government triggers Article 50 by the end of March.