Almost two years after the 2016 Brexit referendum, in which 51.9% of voters supported the withdrawal of the UK from the EU, there has yet to be any significant economic impact.
Uncertainty is high, though, and it remains unclear how much Brexit will impact the UK’s property market. There is no denying that the subject weighs heavily on homeowners’ and buyers’ minds — the wait-and-see option is currently the common strategy among general property buyers; this mindset does not help to push the prices.
According to a poll of housing market specialists, there is about a one-in-three chance of a significant correction in London house prices by the end of 2019.
Andy Foote, the director of property developer SevenCapital, said: “Whilst a drop in value is never a welcome occurrence, experienced property investors will know that if Brexit were to trigger a downfall, effectively it is just a catalyst for the inevitable. The property market goes up and down over time. Once it’s been down, it comes back stronger, and then the cycle repeats itself.
“Furthermore, if investors are slowing down their buying activity because of uncertainty over Brexit, seasoned and active investors still confident in the market will see this as an opportunity to purchase whilst the prices are slightly down, so that they gain more when they go back up again.”
Credit rating agency Moody’s stated that the trend benefits first-time buyers. Gaby Trinkaus, a vice president and senior analyst at Moody’s, said: “First-time buyers would benefit from lower competition for housing, as house price and rental inflation would slow down if immigration is curbed.”
Another credit rating agency, Finch, has a similar outlook: the fall in prices would merely bring average property values back down to a “sustainable” level.
This year, average home prices in London for the first quarter fell 3.8% compared to the same period in 2018. London house prices fell at their fastest rate for almost a decade in January, wiping more than £7,500 off the price of an average home in the capital.
The decline in London is not city-wide. While Central London boroughs are the most affected, the outer suburbs have seen some average price increase. For the rest of the UK, house price growth remained sluggish in February, with price index just 0.4% higher than the same time last year.
One thing is for sure: while many are holding their breaths until October 31, there are plenty of bargains to be found in London.